China International Capital Corporation Hong Kong Securities Limited

29/F, One International Finance Centre

1 Harbour View Stret

Central

Hong Kong

August 11, 2025

The Board of Directors

SIC CO., LTD. (

山东天岳先进科技股份有限公司

) (the “Company”)

No. 99, South Tianyue Road

Huaiyin District, Jinan City

Shandong, PRC

Dear Sirs/Madams,

We, China International Capital Corporation Hong Kong Securities Limited, as the joint sponsor in

conection with the Company’s proposed global ofering and the proposed listing of its H shares on

the Main Board of The Stock Exchange of Hong Kong Limited (the “Stock Exchange”), refer to the

prospectus of the Company dated August 11, 2025 (the “Prospectus”).

We hereby give, and confirm that we have not withdrawn, our consent to the isue of the Prospectus by

the Company, with the inclusion therein of al references to our name, qualifications, confirmations

and opinions in the form and context in which they respectively apear in the Prospectus.

We hereby consent to you releasing this leter to the Registrar of Companies in Hong Kong and the Stock

Exchange and refering to it in the Prospectus.

We also consent to a copy of this leter being made available on display as described in the section

headed “Documents Delivered to the Registrar of Companies and Available on Display” in Apendix

VI to the Prospectus.

-signature page to folow-

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CITIC Securities (Hong Kong) Limited

18/F, One Pacific Place

88 Quensway

Hong Kong

August 11, 2025

The Board of Directors

SIC CO., LTD. (山东天岳先进科技股份有限公司) (the “Company”)

No. 99, South Tianyue Road

Huaiyin District, Jinan City

Shandong, PRC

Dear Sirs/Madams,

We, CITIC Securities (Hong Kong) Limited, as the joint sponsor in conection with the Company’s

proposed global ofering and the proposed listing of its H shares on the Main Board of The Stock

Exchange of Hong Kong Limited (the “Stock Exchange”), refer to the prospectus of the Company

dated August 11, 2025 (the “Prospectus”).

We hereby give, and confirm that we have not withdrawn, our consent to the isue of the Prospectus by

the Company, with the inclusion therein of al references to our name, qualifications, confirmations

and opinions in the form and context in which they respectively apear in the Prospectus.

We hereby consent to you releasing this leter to the Registrar of Companies in Hong Kong and the Stock

Exchange and refering to it in the Prospectus.

We also consent to a copy of this leter being made available on display as described in the section

headed “Documents Delivered to the Registrar of Companies and Available on Display” in Apendix

VI to the Prospectus.

-signature page to folow-

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C
M
Y
CM
MY
CY
CMY
K

山东天岳先进科技股份有限公司

山东天岳先进科技股份有限公司

山

东

天

岳

先

进

科

技

股

份

有

限

公

司

Joint Bokruners and Joint Lead Managers

Joint Sponsors, Sponsor-OC, Overal Cordinators, Joint Global Cordinators,

(A joint stock company incorporated in the People’s Republic of China with limited liability)

Stock Code : 2631

GLOBAL

OFERING

Overal Cordinators, Joint Global Cordinators, Joint Bokruners and Joint Lead Managers

Joint Global Cordinators, Joint Bokruners and Joint Lead Managers

Project 216 Cover V08T_32m_ENG_OP.pdf 1 7/8/2025 7:02 PM

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IMPORTANTNOTICETOINVESTORS:

FULYELECTRONICAPLICATIONPROCES

WehaveadoptedafulyelectronicaplicationprocesfortheHongKongPublicOfering.

WewilnotprovideprintedcopiesofthisprospectusinrelationtotheHongKongPublic

Ofering.

ThisprospectusisavailableathewebsiteoftheStockExchangeatw.hkexnews.hk

underthe“HKEXnews>NewListings>NewListingInformation”section,andourwebsiteat

w.sic.c.Youmaydownloadandprintfromthesewebsiteadresesifyouwantaprinted

copyofthisprospectus.

ToaplyfortheHongKongOferShares,youmay:

(1)aplyonlineviatheWhiteFormeIPOserviceatw.eipo.com.hk;or

(2)aplyelectronicalythroughtheHKSCEIPOchanelandcauseHKSCNomines

toaplyonyourbehalfbyinstructingyourbrokerorcustodianwhoisaHKSC

ParticipantogivelectronicaplicationinstructionsviaHKSC’sFINIsystemto

aplyfortheHongKongOferSharesonyourbehalf.

WewilnotprovideanyphysicalchanelstoaceptanyaplicationfortheHongKong

OferSharesbythepublic.Thecontentsofthelectronicversionofthisprospectusare

identicaltotheprintedprospectusasregisteredwiththeRegistrarofCompaniesinHongKong

pursuantoSection342CoftheCompanies(WindingUpandMiscelaneousProvisions)

Ordinance.

Ifyouareanintermediary,brokeroragent,pleaseremindyourcustomers,clientsor

principals,asaplicable,thathisprospectusisavailableonlineathewebsiteadresestated

above.

Pleaserefertothesectionheaded“HowtoAplyfortheHongKongOferShares”inthis

prospectusforfurtherdetailsontheproceduresthroughwhichyoucanaplyfortheHong

KongOferShareselectronicaly.

IMPORTANT

---

YouraplicationthroughtheWhiteFormeIPOserviceortheHKSCEIPOchanelmust

bemadeforaminimumof100HongKongOferSharesandinmultiplesofthatnumberofHong

KongOferSharesasetoutinthetablebelow.NoaplicationforanyothernumberofHong

KongOferShareswilbeconsideredandsuchanaplicationisliabletoberejected.

IfyouareaplyingthroughtheWhiteFormeIPOservice,youmayrefertothetablebelow

fortheamountpayableforthenumberofSharesyouhaveselected.Youmustpaytherespective

amountpayableonaplicationinfuluponaplicationforHongKongOferShares.

IfyouareaplyingthroughtheHKSCEIPOchanel,yourbrokerorcustodianmayrequire

youtopre-fundyouraplicationinsuchamountasdeterminedbythebrokerorcustodian,based

ontheaplicablelawsandregulationsinHongKong.Youareresponsibleforcomplyingwithany

suchpre-fundingrequirementimposedbyourbrokerorcustodianwithrespectotheHongKong

OferSharesyouapliedfor.

No.ofHongKong

OferShares

apliedfor

Amount

payable

(2)

onaplication

No.ofHongKong

OferShares

apliedfor

Amount

payable

(2)

onaplication

No.ofHongKong

OferShares

apliedfor

Amount

payable

(2)

onaplication

No.ofHongKong

OferShares

apliedfor

Amount

payable

(2)

onaplication

HK$HK$HK$HK$

1004,323.171,50064,847.468,000345,853.1090,0003,890,847.42

2008,646.322,00086,463.289,000389,084.74100,0004,323,163.80

30012,969.502,500108,079.1010,000432,316.38200,0008,646,327.60

40017,292.663,000129,694.9120,000864,632.75300,00012,969,491.40

50021,615.823,500151,310.7230,0001,296,949.15400,00017,292,655.20

60025,938.984,000172,926.5540,0001,729,265.52500,00021,615,819.00

70030,262.144,500194,542.3750,0002,161,581.90600,00025,938,982.80

80034,585.305,000216,158.1960,0002,593,898.28800,00034,585,310.40

90038,908.486,000259,389.8370,0003,026,214.651,000,00043,231,638.00

1,00043,231.647,000302,621.4780,0003,458,531.051,193,600

(1)

51,601,283.11

(1)MaximumnumberofHongKongOferSharesyoumayaplyfor.

(2)Theamountpayableisinclusiveofbrokerage,SFCtransactionlevy,theStockExchangetradingfeandAFRC

transactionlevy.Ifyouraplicationisucesful,brokeragewilbepaidtotheExchangeParticipants(asdefined

intheListingRules)andtheSFCtransactionlevy,theStockExchangetradingfeandAFRCtransactionlevyare

paidtotheStockExchange(inthecaseoftheSFCtransactionlevy,colectedbytheStockExchangeonbehalfof

theSFC;andinthecaseoftheAFRCtransactionlevy,colectedbytheStockExchangeonbehalfoftheAFRC).

IMPORTANT

---

IfthereisanychangeinthefolowingexpectedtimetableoftheHongKongPublic

Ofering,wewilisueananouncementinHongKongtobepublishedontheCompany’s

websiteatw.sic.candthewebsiteoftheStockExchangeatw.hkexnews.hk.

HongKongPublicOferingcomences.9:00a.m.on

Monday,August11,2025

LatestimeforcompletingelectronicaplicationsundertheWhite

FormeIPOservicethroughthedesignatedwebsite

w.eipo.com.hk

(2)

.11:30a.m.on

Thursday,August14,2025

Aplicationlistsopen

(3)

.11:45a.m.on

Thursday,August14,2025

Latestimefor(a)completingpaymentofWhiteFormeIPO

aplicationsbyefectinginternetbankingtransfer(s)orPS

paymentransfer(s)and(b)givingelectronicaplication

instructionstoHKSC

(4)

.12:00nonon

Thursday,August14,2025

IfyouareinstructingyourbrokerorcustodianwhoisanHKSCParticipantogive

electronicaplicationinstructionsviaFINItoaplyfortheHongKongOferSharesonyour

behalf,youareadvisedtocontactyourbrokerorcustodianforthelatestimeforgivingsuch

instructionswhichmaybediferentfromthelatestimeastatedabove.

Aplicationlistsclose

(3)

.12:00nonon

Thursday,August14,2025

ExpectedPriceDeterminationDate

(5)

.by12:00non

Friday,August15,2025

AnouncementoftheOferPriceontheCompany’swebsiteat

w.sic.c

(6)

andthewebsiteoftheStockExchangeat

w.hkexnews.hk.nolaterthan11:00p.m.on

Monday,August18,2025

EXPECTEDTIMETABLE

–i–

---

Anouncementofthelevelofindicationsofinterestinthe

InternationalOfering,thelevelofaplicationsintheHong

KongPublicOferingandthebasisofalocationoftheOfer

SharesontheCompany’swebsiteatw.sic.candthe

websiteoftheStockExchangeatw.hkexnews.hk.nolaterthan11:00p.m.on

Monday,August18,2025

TheresultsofalocationsintheHongKongPublicOfering(withsucesfulaplicants’

identificationdocumentnumbers,whereapropriate)tobeavailablethroughavarietyofchanels,

including:

(cid:129)intheanouncementobepostedontheCompany’swebsite

andthewebsiteoftheStockExchangeatw.sic.cand

w.hkexnews.hk,respectively,.nolaterthan11:00p.m.on

Monday,August18,2025

(cid:129)fromthedesignatedresultsofalocationswebsiteat

w.iporesults.com.hk(alternatively:

w.eipo.com.hk/eIPOAlotment)witha“searchbyID”

functionfrom.11:00p.m.on

Monday,August18,2025

to12:00midnighton

Sunday,August24,2025

(cid:129)fromthealocationresultstelephoneinquirybycaling

+85228628555betwen9:00a.m.and6:00p.m.onTuesday,August19,2025,

Wednesday,August20,2025,

Thursday,August21,2025and

Friday,August22,2025

HSharecertificatesinrespectofwholyorpartialysucesful

aplicationstobedispatchedordepositedintoCASonor

before

(7)(9)

.Monday,August18,2025

WhiteForme-Refundpaymentinstructions/refundchecksin

respectofwholyorpartialysucesfulaplicationsifthefinal

OferPriceislesthanthemaximumOferPriceperOfer

Shareinitialypaidonaplication(ifaplicable)orwholyor

partialyunsucesfulaplicationstobedispatched/colectedon

orbefore

(8)(9)

.Tuesday,August19,2025

EXPECTEDTIMETABLE

–i–

---

DealingsintheHSharesontheStockExchangexpectedto

comenceat9:00a.m.on.Tuesday,August19,2025

Notes:

(1)AldatesandtimesrefertoHongKonglocaldatesandtime,exceptasotherwisestated.

(2)Youwilnotbepermitedtosubmityouraplicationthroughthedesignatedwebsiteatw.eipo.com.hkafter

11:30a.m.onthelastdayforsubmitingaplications.Ifyouhavealreadysubmitedyouraplicationandobtained

anaplicationreferencenumberfromthedesignatedwebsitepriorto11:30a.m.,youwilbepermitedtocontinue

theaplicationproces(bycompletingpaymentofaplicationmonies)until12:00nononthelastdayfor

submitingaplications,whentheaplicationlistsclose.

(3)Ifthereis/areatropicalcyclonewarningsignalnumber8orabove,a“black”rainstormwarningand/orExtreme

ConditionsinforceinHongKongatanytimebetwen9:00a.m.and12:00nononThursday,August14,2025,

theaplicationlistswilnotopenorcloseonthatday.Se“HowtoAplyforHongKongOferShares—E.

SevereWeatherArangements.”

(4)AplicantswhoaplyforHongKongOferSharesinstructingyourbrokerorcustodiantoaplyonyourbehalf

viaHKSCEIPOchanelshouldrefertothesectionheaded“HowtoAplyforHongKongOferShares—A.

AplicationforHongKongOferShares—2.AplicationChanels.”

(5)ThePriceDeterminationDateisexpectedtobeonorbeforeFriday,August15,2025.If,foranyreason,the

CompanydoesnotagrewiththeSponsor-OC(forthemselvesandonbehalfoftheUnderwriters)onthepricing

oftheOferSharesby12:00nononFriday,August15,2025,theGlobalOferingwilnotprocedandwilapse.

(6)Noneofthewebsitesetoutinthisectionoranyoftheinformationcontainedonthewebsitesformspartofthis

prospectus.

(7)NotemporarydocumentoftitlewilbeisuedinrespectoftheOferShares.HSharecertificateswilonlybecome

validevidenceoftitleat8:00a.m.ontheListingDateprovidedthatheGlobalOferinghasbecomeunconditional

inalrespectsandneitheroftheUnderwritingAgrementshasbenterminatedinacordancewiththeirespective

termsatorbeforethatime.InvestorswhotradeHSharesonthebasisofpubliclyavailablealocationdetailsor

priortothereceiptofHSharecertificatesortheHSharecertificatesbecomingvalidevidenceoftitledoso

entirelyatheirownrisk.

(8)White-forme-Refundpaymentinstructions/refundcheckswilbeisuedinrespectofwholyorpartialy

unsucesfulaplicationspursuantotheHongKongPublicOferingandalsoinrespectofwholyorpartialy

sucesfulaplicationsintheventhathefinalOferPriceislesthanthepricepayableperOferShareon

aplication.Partoftheaplicant’sHongKongidentitycardnumberorpasportnumber,or,iftheaplicationis

madebyjointaplicants,partoftheHongKongidentitycardnumberorpasportnumberofthefirst-named

aplicant,providedbytheaplicant(s)maybeprintedontherefundcheck,ifany.Suchdatawouldalsobe

transferedtoathirdpartyforefundpurposes.Banksmayrequireverificationofanaplicant’sHongKong

identitycardnumberorpasportnumberbeforencashmentoftherefundcheck.Inacuratecompletionofan

aplicant’sHongKongidentitycardnumberorpasportnumbermayinvalidateordelayencashmentoftherefund

check.

EXPECTEDTIMETABLE

–i–

---

(9)AplicantswhohaveapliedforHongKongOferSharesthroughHKSCEIPOchanelshouldrefertothe

sectionheaded“HowtoAplyforHongKongOferShares—D.Despatch/ColectionofHShareCertificatesand

RefundofAplicationMonies”fordetails.

AplicantswhohaveapliedthroughtheWhiteFormeIPOserviceandpaidtheiraplicationsmoniesthrough

singlebankacountsmayhaverefundmonies(ifany)dispatchedtothebankacountintheformofWhiteForm

e-Refundpaymentinstructions.AplicantswhohaveapliedthroughtheWhiteFormeIPOserviceandpaidtheir

aplicationmoniesthroughmultiplebankacountsmayhaverefundmonies(ifany)dispatchedtotheadresas

specifiedintheiraplicationinstructionsintheformofrefundcheck(s)byordinarypostatheirownrisk.

Furtherinformationisetoutinthesectionheaded“HowtoAplyforHongKongOferShares—D.

Despatch/ColectionofHShareCertificatesandRefundofAplicationMonies.”

Theabovexpectedtimetableisasumaryonly.FordetailsofthestructureoftheGlobal

Ofering,includingitsconditions,andtheproceduresforaplicationsforHongKongOfer

Shares,pleasereferto“StructureoftheGlobalOfering”and“HowtoAplyforHongKongOfer

Shares”respectively.

IftheGlobalOferingdoesnotbecomeunconditionaloristerminatedinacordancewithits

terms,theGlobalOferingwilnotproced.Insuchacase,wewilpublishananouncementas

sonaspracticablethereafter.

EXPECTEDTIMETABLE

–iv–

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IMPORTANTNOTICETOPROSPECTIVEINVESTORS

ThisprospectusisisuedbyusolelyinconectionwiththeHongKongPublicOfering

andtheHongKongOferSharesandoesnotconstituteanofertoselorasolicitationofan

ofertobuyanysecurityotherthantheHongKongOferSharesoferedbythisprospectus

pursuantotheHongKongPublicOfering.Thisprospectusmaynotbeusedforthepurposeof

making,andoesnotconstitute,anoferorinvitationinanyotherjurisdictionorinanyother

circumstances.NoactionhasbentakentopermitapublicoferingoftheHongKongOfer

SharesinanyjurisdictionotherthanHongKongandnoactionhasbentakentopermithe

distributionofthisprospectusinanyjurisdictionotherthanHongKong.Thedistributionofthis

prospectusforpurposesofapublicoferingandtheoferingandsaleoftheHongKongOfer

Sharesinotherjurisdictionsaresubjectorestrictionsandmaynotbemadexceptas

permitedundertheaplicablesecuritieslawsofsuchjurisdictionspursuantoregistration

withorauthorizationbytherelevantsecuritiesregulatoryauthoritiesoranexemption

therefrom.

Youshouldrelyonlyontheinformationcontainedinthisprospectustomakeyour

investmentdecision.TheHongKongPublicOferingismadesolelyonthebasisofthe

informationcontainedandtherepresentationsmadeinthisprospectus.Wehavenotauthorized

anyonetoprovideyouwithinformationthatisdiferentfromwhatiscontainedinthis

prospectus.Anyinformationorepresentationotcontainednormadeinthisprospectusmust

notbereliedonbyouashavingbenauthorizedbyus,anyoftheJointSponsors,the

Sponsor-OC,theOveralCordinators,theCapitalMarketIntermediaries,theJointGlobal

Cordinators,theJointBokruners,theJointLeadManagers,theUnderwriters,anyofouror

theirespectivedirectors,oficers,employes,agents,orepresentativesofanyofthemorany

otherpartiesinvolvedintheGlobalOfering.

Page

EXPECTEDTIMETABLE.i

CONTENTS.v

SUMARY.1

DEFINITIONS.26

GLOSARYOFTECHNICALTERMS.39

CONTENTS

–v–

---

FORWARD-LOKINGSTATEMENTS.48

RISKFACTORS.50

WAIVERSFROMSTRICTCOMPLIANCEWITHTHELISTINGRULES.87

INFORMATIONABOUTHISPROSPECTUSANDTHEGLOBALOFERING.96

DIRECTORS,SUPERVISORSAND

PARTIESINVOLVEDINTHEGLOBALOFERING.101

CORPORATEINFORMATION.116

INDUSTRYOVERVIEW.118

REGULATORYOVERVIEW.140

HISTORY,DEVELOPMENTANDCORPORATESTRUCTURE.163

BUSINES.171

DIRECTORS,SUPERVISORSANDSENIORMANAGEMENT.248

RELATIONSHIPWITHOURCONTROLINGSHAREHOLDERS.268

CONECTEDTRANSACTIONS.274

SUBSTANTIALSHAREHOLDERS.280

SHARECAPITAL.283

CORNERSTONEINVESTORS.286

FINANCIALINFORMATION.293

FUTUREPLANSANDUSEOFPROCEDS.357

UNDERWRITING.361

STRUCTUREOFTHEGLOBALOFERING.376

HOWTOAPLYFORHONGKONGOFERSHARES.393

CONTENTS

–vi–

---

APENDIXI—ACOUNTANTS’REPORT.I-1

APENDIXI—UNAUDITEDPROFORMAFINANCIALINFORMATION.I-1

APENDIXI—PROPERTYVALUATIONREPORT.I-1

APENDIXIV—TAXATIONANDFOREIGNEXCHANGE.IV-1

APENDIXV—SUMARYOFPRINCIPALEGALAND

REGULATORYPROVISIONS.V-1

APENDIXVI—SUMARYOFTHEARTICLESOFASOCIATION.VI-1

APENDIXVI—STATUTORYANDGENERALINFORMATION.VI-1

APENDIXVI—DOCUMENTSDELIVEREDTOTHEREGISTRAROF

COMPANIESANDAVAILABLEONDISPLAY.VI-1

CONTENTS

–vi–

---

Thisumaryaimstogiveyouanoverviewoftheinformationcontainedinthis

prospectus.Asthisisasumary,itdoesnotcontainaltheinformationthatmaybeimportant

toyou.YoushouldreadthentireprospectusbeforeyoudecidetoinvestintheOferShares.

Therearerisksasociatedwithanyinvestment.Someoftheparticularisksininvestingin

theOferSharesaresetoutinthesectionheaded“RiskFactors.”Youshouldreadthatsection

carefulybeforeyoudecidetoinvestintheOferShares.

OVERVIEW

Weareacompanywithstrongexpertiseinthewidebandgap

(1)

semiconductormaterial

industry,focusingontheresearch,developmentandindustrializationofSiCsubstratesinceour

inception.AcordingtoFrost&Sulivan,basedonrevenuefromSiCsubstratesalesin2024,we

wereamongthetopthreglobalSiCsubstratemanufacturerswithamarketshareof16.7%.

OurSiCmaterialsempowertherenewablenergyandAIsectors,whicharedrivingfuture

technologicaladvancements.OurSiCsubstratescanbeapliedacrosvariousectors,including

electricvehicles,AIdatacenters,photovoltaicsystems,AIglases,railtransportation,powergrids,

householdapliancesandadvancedtelecomunicationbasestations.Leveragingourtechnological

inovationcapabilities,robustmasproductioncapacity,productportfolio,colaborativecosystem

withupstreamandownstreamarketparticipantsandeficientmanagement,weareathe

forefrontoftherapidlyadvancingSiCindustry.AcordingtoFrost&Sulivan,asofMarch31,

2025,wewereoneofthefewcompaniesintheworldcapableofmasproducing8-inchSiC

substrates,oneofthefirstocomercializeSiCsubstratesrangingfroma2-inchtoan8-inch

diameter,thefirstointroduce12-inchSiCsubstratesandoneofthefirstoproduceP-typeSiC

substrates

(2)

usingtheliquidphasemethod.

Wehavestablishedourselvesasakeysupliertoglobalyrecognizedsemiconductor

companies,andourproductshavegainedwidespreadrecognitioninternationaly.AsofMarch31,

2025,wehadestablishedbusinesrelationshipswithoverhalfofthetoptenglobalpower

(1)widebandgapinthesemiconductorindustryreferstothelargenergydiferencebetwenthevalenceand

conductionbandsofcertainsemiconductormaterials,whichenablesuniquelectricalandthermalproperties

advantageousforadvancedelectronicandoptoelectronicaplications

(2)SiCmaterialdopedwithelementsuchasaluminum,whichcangenerateanexcesofholesandenhancethe

electricalconductivity,makingitsuitableforhigh-powerelectronicdevices

SUMARY

---

semiconductordevicemanufacturersintermsofrevenuein2024.Ourcustomersprimarilyutilize

ourSiCsubstratestomanufacturepowerdevicesandradiofrequencydevices,whichareultimately

apliedtoendproductsinsectorsuchaselectricvehicles,AIdatacentersandphotovoltaic

systems.

DedicatedtoSiCmaterialsforover14years,weareoneofthefirstcompaniesinChinato

achievetheindustrializationofbothsemi-insulatingandconductiveSiCsubstrates.Leveragingour

capabilitiesinR&D,productionandmanagement,wehavecontinuouslysolidifiedouradvantage

inproductscaling.TheSiCsubstratesthatwemasproducedhavevolvedfroma2-inchtoan

8-inchdiameter.In2024,weintroducedtheindustry’sfirst12-inchSiCsubstrate.Acordingto

Frost&Sulivan,increasingthediameterofaSiCsubstrateresultsinalargersurfacearea,which

enablestheproductionofmorechipsonasinglesubstrateandreducesedgewaste,thereby

improvingproductioneficiencyandenhancingcost-efectivenes.Beyondscalingthediameterof

ourSiCsubstrates,wecontinuetomaintainleadershipinindustrializationcapabilitiesandproduct

quality.Bydrivingproductscalingandproductioneficiency,wenableourcustomersto

continuouslyreducethecostsofusingSiCsubstrates,therebyaceleratingtheadoptionofSiC

substratesinmoreaplicationscenarios.

AsoftheLatestPracticableDate,wehadmasteredcoretechnologiesencompasingevery

stageofSiCsubstrateproduction,includingequipmentdesign,thermalfieldesign,powder

synthesis,crystalgrowth,substrateprocesingandqualityinspection.Ourproprietary

technologicaltolkithasenabledustoachievehighstandardsinproductdefectcontrolandcost

optimization.

Throughoutourjourney,wehaveconsistentlydemonstratedourcomitmentoinovation

andtechnologicaladvancementintheSiCindustry.Ourleadingpositionishighlightedbyour

milestones,spaningfromproductdevelopmentomarketrecognition.Foundedin2010,we

sucesfulyachievedthemasproductionof4-inchSiCsubstratesand6-inchSiCsubstratesin

2015and2021,respectively.In2022,wewerelistedontheSTARMarket,andbecamethefirst

widebandgapsemiconductormaterialcompanylistedinChina.In2023,weachievedthemas

productionof8-inchSiCsubstrates.In2024,weintroducedtheindustry’sfirst12-inchSiC

substrate.Inrecognitionofourcapabilitiesandinvestmentvalue,ourstockwasincludedin

prominentindicesuchastheSTARMarket50IndexandtheMSCIChinaASharesOnshore

Index.

DuringtheTrackRecordPeriod,weachievedrapidgrowthinrevenueandsucesfuly

transitionedfromanetlostoanetprofitposition.Ourevenueincreasedby199.9%from

RMB417.0milionin2022toRMB1,250.7milionin2023,andincreasedby41.4%from

RMB1,250.7milionin2023toRMB1,768.1milionin2024,despitea4.2%decreaseinrevenue

fromRMB426.1milioninthethremonthsendedMarch31,2024toRMB408.0milioninthe

SUMARY

---

thremonthsendedMarch31,2025.Intandemwithourapidgrowthinrevenueandbenefiting

fromourtechnologicalcapabilitiesandeficientmanagement,ourgrosmarginalsodemonstrated

consistentimprovement.Ourgroslosmarginwas7.9%in2022whilewehaveachieveda

turnaroundwithgrosmarginof14.6%in2023andgrosmarginof24.6%in2024.Ourgros

profitmarginwas21.5%inthethremonthsendedMarch31,2024and22.7%inthethremonths

endedMarch31,2025.In2022and2023,werecordednetlosesofRMB175.7milionand

RMB45.7milion,respectively,buthavesucesfulyachievedaturnaroundin2024withanet

profitofRMB179.0milion.InthethremonthsendedMarch31,2024and2025,werecordednet

profitsofRMB46.1milionandRMB8.5milion,respectively.

OURSTRENGTHS

Webelievethathefolowingstrengthscontributetourmarketposition,ensuringour

sucesandistinguishingusfromourcompetitors:

(cid:129)AleaderdrivingthecomercializationofSiCmaterials;

(cid:129)Technicalbariersandinovationsuportedbyourforward-thinkingR&Dstrategiesand

capabilities;

(cid:129)Robustmasproductioncapabilitiesforhigh-quality,eficientandstabledelivery;

(cid:129)Continuouslyexpandingandhigh-performanceproductportfoliotosuportdownstream

aplications;

(cid:129)Colaborativecosystemwithcustomersandsupliersthatpropelstheadvancementof

theSiCindustry;and

(cid:129)Visionaryandexperiencedmanagementeamwithacompetitivemindset.

Se“Busines—OurStrengths.”

OURSTRATEGIES

Wewilfocusonthefolowingkeystrategiestoachievefurtherdevelopment:

(cid:129)MaintaininginovationleadershiptoaceleratetheadoptionofSiCmaterials;

(cid:129)EnhancingR&Dcapabilities,optimizingtechnicalayoutandenrichingproduct

portfolio;

SUMARY

---

(cid:129)Maintainingandcontinuouslyenhancingouradvancedproductioncapacitytoimprove

productioneficiencyandeliveryquality;

(cid:129)Strengtheninglobalcolaborativecosystem,expandingcustomerbaseandepening

customerelationships;

(cid:129)Continuouslyatractingtoptalentandenhancingmanagementcapabilities;and

(cid:129)Pursuingstrategicinvestments,partnershipsoracquisitions.

Se“Busines—OurStrategies.”

OURPRODUCTS

Wefocusontheresearch,developmentandproductionofSiCsubstrates.AcordingtoFrost

&Sulivan,wewereoneofthefewglobalmarketparticipantscapableofmasproducing8-inch

SiCsubstrates.Leveragingourin-houseR&Dcapabilities,wemasteredthecoretechnologies

coveringalstagesofSiCsubstrateproduction,includingequipmentdesign,thermalfieldesign,

powdersynthesis,crystalgrowth,substrateprocesingandqualityinspection.Thisenabledour

masproductionof8-inchSiCsubstratesin2023,overcomingthechalengesofhigh-quality

growthinterfacecontrolandefectcontrolintheproductionofSiCsubstrates.InNovember2024,

weintroducedtheindustry’sfirst12-inchSiCsubstrate,whichmarksasignificantstepintothera

oflargeSiCsubstrates.ThefolowingpictureilustratesoursampleSiCsubstrates:

DedicatedtoSiCsubstratesforover14years,wearecomitedtoprovidingourcustomers

withigh-qualitySiCsubstrates.Throughtechnologicalinovation,wecontinuouslyenhancethe

performanceofourcustomers’productsacrosdiverseindustries.DuringtheTrackRecordPeriod,

weprimarilyofered4-inch,6-inchand8-inchSiCsubstrates,andwewereoneofthefew

companiesworldwidethatcouldoferbothconductiveandsemi-insulatingSiCsubstratesin

variousdiameters.

SUMARY

---

AsofMarch31,2025,wehadestablishedbusinesrelationshipswithoverhalfoftheglobal

toptenpowersemiconductordevicemanufacturersintermsofrevenuein2024.AcordingtoFrost

&Sulivan,intermsofrevenuefromSiCsubstratesalesin2024,wewereamongthetopthre

globalSiCmanufacturerswithamarketshareof16.7%.

In2022,2023,2024andthethremonthsendedMarch31,2024and2025,thesalesvolume

ofourSiCsubstrateswas63,795pieces,226,302pieces,361,191pieces,85,160piecesand97,723

pieces,respectively,andtheaveragesalespricewasRMB5,110.4,RMB4,798.0,RMB4,080.1,

RMB3,914.1andRMB3,369.4perpiece,respectively.In2022,2023,2024andthethremonths

endedMarch31,2024and2025,ourevenuefromSiCsubstratesalesamountedtoRMB326.0

milion,RMB1,085.8milion,RMB1,473.7milion,RMB333.3milionandRMB329.3milion

respectively,acountingfor78.2%,86.8%,83.3%,78.2%and80.7%ofourtotalrevenue,

respectively.DuringtheTrackRecordPeriod,wealsosoldotherSiCproductsthatdonotmet

semiconductor-gradespecificationsacordingtourinternalclasificationstandards,suchas

moisanitegemstone,withresearchandconsumergodsaplications,tourcustomers.

Aplications

TheilustrationbelowsumarizesourSiCsubstrates’aplicableindustriesandthend

productsthatadopthem.

SUMARY

---

ElectricVehicles

OurSiCsubstratesaremainlyusedinelectricvehicles’motordrives,on-boardchargers

(OBCs)andDC/DCconverters.AcordingtoFrost&Sulivan,powermodulesthatadoptourSiC

substratescan(i)improvethenergyconversioneficiencyofmotordrivesandsignificantly

reducenergylosesby70%to90%,therebyincreasingtherangeofelectricvehicles,and

maintainstablehigh-poweroutputinhigh-temperaturenvironments,therebysuportinghigher

ratedvoltages;(i)enhanceOBCs’chargingeficiencyandenablehigh-voltagefastcharging,

therebyshorteningthechargingtimeofelectricvehiclesandultimatelyimprovingtheuser

experienceforelectricvehicleowners;and(i)increasethenergyconversioneficiencyof

DC/DCconvertersandreducenergylosesby80%to90%,therebyimprovingoveralelectrical

energyutilizationeficiencyandminimizingtheimpactofon-boardelectronicdevicepower

consumptiononelectricvehiclerange.ByadoptingourSiCsubstrates,electricvehicle

manufacturerscanproducemoreficient,reliableandcost-efectivevehicles.

AIDataCenters

TheadoptionofourSiCsubstratespresentsexcitingoportunitiesforAIdatacenters.Our

SiCsubstratescanbeadoptedintheAC-DCstageinpowersuplyunitsforAIdatacentersto

reducenergyconsumption,improvecolingsolutionsandenhancepowerdensityforservers,

ultimatelysuportingthegrowingdemandforhigh-performanceAIcomputationwithsignificant

powerdemands.

PhotovoltaicSystems

OurSiCsubstratescanotonlyimprovenergyconversioneficiencyandreduceswitching

losesforphotovoltaicomponents,butalsoreducethesizeofpasivecomponents,minimizing

overalsystemcost,weightandvolumetoeasetransportationandinstalation.OurSiCsubstrates’

abilitytoperateatelevatedfrequenciesandtemperaturesenhancespowerconversioneficiency,

resultinginmorefectivesolarenergysystemsthatconvertsunlightintousablelectricitywith

improvedthermalmanagement.Aditionaly,thedurabilityandsmalersizeofSiC-basedpower

devicesleadtoloweroperationalcostsandextendedsystemlifespans,whichultimatelyenhances

theficiency,reliability,andcost-efectivenesofphotovoltaicsolutions,makingsolarenergy

morecompetitiveintherenewablenergymarket.

SUMARY

---

AIGlases

DuetoSiCmaterials’significantlyhigherefractiveindexcomparedtohigh-refractiveglas

andlithiumniobate,theadoptionofourSiCmaterialsinthemakingofopticalwaveguidelenses

canresultinawiderfieldofviewandsimplerful-colordisplaystructures.Thiscanleadtoa

reductioninthesize,weightandcomplexityofAIglases,significantlyenhancingthe

performanceanduserexperienceofAIglases.

RailTransportation

OurSiCsubstratesarecapableofhandlinghighervoltagesandtemperatureswithlower

energyloses,alowingformorefectiveandcompactpowerconversionsystems,suchastraction

converters,usedintrains.Thisresultsinimprovedpowerdensityandreducedoveralweight,

contributingtolowerenergyconsumptionandenhancedspedandreliabilityoftrains.By

incorporatingourSiCsubstrates,railtransportationsystemscanachievehighereficiency,and

increasedoperationalperformance,facilitatingmoreconomicalandsustainablerailoperations.

PowerGrids

OurSiCsubstratescansignificantlyenhancepowergridsbyimprovingtheficiencyand

capacityofpowertransmisionandistribution.Capableofoperatingathighertemperatures,

voltages,andfrequencies,ourSiCsubstratesenablemorecompactandeficientdevicesuchas

converters,switchgear,andtransformers,reducingenergylosesandimprovingpowerquality.For

instance,athesamevoltageandconversionfrequency,MOSFETinvertersadoptingourSiC

substrateshavesubstantialylowerenergylosesascomparedtosilicon-basedIGBTinverters.Our

SiCsubstrates’highthermalconductivityalsodecreasesheatdisipationandmaintenanceneds,

loweringoperationalcostsandbostingreliability.IntegratingourSiCsubstratesresultsinhigher

eficiency,increasedgridstability,andbetersuportforenewablenergy,fosteringamore

resilientandsustainablenergyinfrastructure.

HouseholdApliances

UtilizationofourSiCsubstratesinthePFCcircuits,bostcircuits,motordrivesand

high-voltagepowersuplies,canenhancethenergyconversioneficiencyofhousehold

apliances,therebyimprovingtheirenergyperformanceandeficiencyandreducinghousehold

electricityconsumption.OurSiCsubstratesalsoenablepowersemiconductordevicestoincrease

thepowerdensityofpowersupliesandreducethesizeofheatsinks,therebydecreasingthe

volumeandcostofmagneticomponentsandthermalmanagementpartsofhouseholdapliances,

promotingtheminiaturizationofhouseholdapliances.

SUMARY

---

Advancedtelecomunicationbasestations

AdvancedtelecomunicationbasestationsbenefitfromadoptingourSiCsubstrates.Thelow

radiofrequencylosduetothehighresistivityofourSiCsubstratesimprovestheperformanceof

radiofrequencycomponentsandenablesradiofrequencydevicestoperateathigherfrequencies,

makingSiC-basedGaNanidealchoicefortheadvancedemandsoftelecomunication

technology.Aditionaly,SiC-basedGaNthatusesourSiCsubstratesboastsuperioreficiency

withreducedenergyloses,loweringoperationalcostsandenhancingnetworkperformance.The

highbreakdownvoltagealowstelecomunicationdevicestoperatesafelyathighervoltages,

vitalforthehigh-poweradiofrequencyaplicationsintelecomunicationsystems.Furthermore,

thehighpowerdensityandfrequencycapabilityofSiC-basedGaNenablemorecompactand

eficientpoweramplifiersnededforadvancedtelecomunicationbasestations.

R&D

WearecomitedtoR&Dandinovation.Wehaveinvestedsignificantresourcesintothe

R&DofSiCsubstratesandproductiontechnologies,whichiscrucialforasemiconductormaterial

company.Ourfocuspansfundamentalresearch,productdevelopmentandengineringR&D,

ensuringthatwenotonlykepupwithtechnologicaladvancementsbutalsocontinualyenhance

ourproductoferings.ThisdedicationtoR&Ddrivesinovationandpositionsustomethe

evolvingdemandsoftheindustry,fortifyingouroleasaleaderinbandgapsemiconductor

materials.OurendeavorsinR&Dhaveresultedinsignificantacomplishmentsasevidencedby

ourintelectualpropertyprofile.AsoftheLatestPracticableDate,wehadbengranted503

patents,including198inventionpatents,14ofwhichwerefromregionsoutsidemainlandChina.

Se“Busines—R&D.”

PRODUCTION

Ourproductionmodelisbeneficialformetingthediversenedsofourcustomers,improving

on-timedelivery,ensuringconsistentproductquality,andenhancingcustomersatisfaction.Italso

helpsuscontrolourinventorylevelandimproveourcapitalutilizationeficiency.

Wenableoptimizationandimprovementsacrosaltechnicalfacetsbyintegratingourcore

technologiesthroughouteverystageofcrystalgrowthandsubstrateprocesing.Aditionaly,we

arededicatedtometingIATF16949standardsforautomotive-gradequalityandsafety

management.Consequently,ourtechnology-drivenproductionmodelbackedbyrobust

managementsystemenablesoursuplyofhigh-qualitySiCsubstrates.

SUMARY

---

DuringtheTrackRecordPeriod,wehadtwoproductionplants,namelytheShandong

productionplantandtheShanghaiproductionplant.In2022,2023,2024andthethremonths

endedMarch31,2024and2025,ourtotalproductioncapacitywas75,000pieces,270,000pieces,

420,000pieces,96,800piecesand105,600piecesofSiCsubstrates,respectively;ouractual

productionwasaproximately71,000pieces,262,000pieces,410,200pieces,83,700piecesand

84,300pieces,respectively;ourutilizationratewas94.7%,97.0%,97.6%,86.5%and79.8%,

respectively.Se“Busines—Production.”

PROCUREMENTANDSUPLYCHAINMANAGEMENT

WeprocureavarietyofmaterialsandequipmentnecesaryforthemanufacturingofourSiC

substrates,includingcarbonpowder,siliconpowder,graphitethermalinsulationmaterials,and

equipmentforcrystalgrowth,slicing,grindingandpolishing.Forkeyproductionmaterials,such

asgraphitethermalinsulationmaterials,wetypicalyenterintolong-termstrategicoperation

agrementswithsupliersandimplementstrategicprocurement.

Wetypicalypartnerwithexperiencedandreputablesuplierstoguarantethequalityofour

products.Ourselectioncriteriafocusontechnologicalexpertise,infrastructureandequipment,

productquality,credentials,reputation,andpricing.Byestablishinglong-termcoperationwith

thesetopsupliers,wensurestableacestoesentialresources,enablingustomaintain

consistentqualityandperformancestandardsinourSiCsubstrates,therebystrengtheningour

competitivepositioninthemarket.

DuringtheTrackRecordPeriod,ourmajorsupliersprimarilyincludedrawmaterialsand

equipmentsupliersaswelasconstructionandutilitieserviceproviders.Purchasesfromour

largestsuplierineachyearof2022,2023,2024andthethremonthsendedMarch31,2025,

amountedtoRMB203.9milion,RMB317.0milion,RMB346.4milionandRMB89.0milion

respectively,acountingfor14.4%,10.5%,21.1%and23.9%ofourtotalpurchaseamount,

respectively,duringthesameperiods.Purchasesfromourfivelargestsupliers(excluding

constructionserviceproviders)duringeachyearin2022,2023,2024andthethremonthsended

March31,2025,amountedtoRMB553.0milion,RMB1,086.4milion,RMB750.2milionand

RMB186.0milionrespectively,acountingfor39.1%,35.9%,45.6%and49.9%ofourtotal

purchases,respectively,duringthesameperiods.Se“Busines—ProcurementandSuplyChain

Management.”

SUMARY

---

QUALITYCONTROL

Westrivetodeliverhigh-qualityproductstourcustomers.Tothatend,wehavedeveloped

andimplementedaZero-DefectPlan,aimingfordefect-fredelivery.Wehavealsoestablished

robustpoliciesandetailedprocedurestoupholdproductquality,anchoredbyacomprehensive

qualitymanagementsystemthatadherestoIATF16949standardsforautomotive-gradequality.To

maintainourcompetitivedgeinqualitymanagement,wesubjectourpracticestoregularinternal

andexternalauditsandasesment.Theintegrityofourqualitycontrolsystemismeticulously

asesedthroughanualinternalaudits.

SALESANDMARKETING

DuringtheTrackRecordPeriod,ourproductsweresoldglobaly.In2022,2023and2024,

ourevenuefromsalesinmarketsoutsideMainlandChinacontinuedtoincreaseandamountedto

RMB52.4milion,RMB414.4milionandRMB845.5milion,respectively,acountingfor12.6%,

33.1%and47.8%ofourtotalrevenue,respectively,duringthesameyears.Inthethremonths

endedMarch31,2024and2025,ourevenuefromsalesoutsideMainlandChinaincreasedfrom

RMB144.0miliontoRMB195.1milion,respectively,acountingfor33.8%and47.8%ofour

totalrevenue,respectively,duringthesameperiods.DuringtheTrackRecordPeriod,weadopteda

directsalesmodelandhaveanexperiencedandhighlytrainedsalesandmarketingteam,

consistingof38personelasofMarch31,2025,whoproactivelyidentifymarketoportunities

andesignsalestrategies.

Wepriceourproductsbyconsideringavarietyofactors,including(i)marketsuplyand

demand,(i)ourcostsofproduction,(i)productspecificationsandiameters,(iv)the

technologicalsophisticationofourproducts,(v)thetargetcustomersegments,and(vi)prevailing

marketpricewithinourproductmarkets.Wemaintainapricingaproachthatalignscloselywith

ourcompetitorsintheindustry,andtherearenosignificantdiscrepanciesinpricingstrategiesor

pricelevels.Byconsideringthesefactors,westrivetofercompetitivepricingwhilensuringthe

sustainabilityandprofitabilityofouroperations.Se“Busines—SalesandMarketing”and

“Busines—Pricing.”

CUSTOMERS

DuringtheTrackRecordPeriod,ourSiCsubstrateswereprimarilysoldtodomesticand

internationalpowersemiconductormanufacturers.Revenuegeneratedfromourlargestcustomerin

eachyearof2022,2023,2024andthethremonthsendedMarch31,2025,amountedto

RMB108.3milion,RMB213.4milion,RMB336.1milionandRMB62.5milion,respectively,

acountingfor26.0%,17.1%,19.0%and15.3%ofourtotalrevenue,respectively,inthesame

periods.Revenuegeneratedfromourfivelargestcustomersineachyearof2022,2023,2024and

SUMARY

---

thethremonthsendedMarch31,2025,amountedtoRMB270.8milion,RMB639.9milion,

RMB1,011.8milionandRMB215.6milion,respectively,acountingfor65.0%,51.3%,57.2%

and52.9%ofourtotalrevenue,respectivelyinthesameperiods.Se“Busines—Salesand

Marketing—Customers.”

COMPETITION

TheglobalSiCsubstratemarketinwhichweoperateishighlycompetitiveandcharacterized

byrapidtechnologicalevolvement,fastchangesincustomerdemandsandpreferences,frequent

introductionofnewproductsandemergenceofnewindustrystandardsandpractices.Inadition,

itishighlyconcentrated,withthetopfivemarketparticipantsintermsofrevenuefromSiC

substratesalesin2024holdingacombinedmarketshareof68.0%,acordingtoFrost&Sulivan.

SiCmaterials,withtheirsuperiorpropertiesandperformanceascomparedtotraditionalsilicon

materials,haveundergonearapidevelopmentinrecentyearsandsignificantlyexpandedtheir

aplicationscenarios,particularlyinpowersemiconductordevices.AcordingtoFrost&Sulivan,

theglobalmarketsizeofpowersemiconductordevicesisexpectedtoreachUSD19.7bilionin

2030,representingaCAGRof35.8%betwen2024and2030.

WecompetewithotherSiCsubstratecompaniesaroundtheworld.AcordingtoFrost&

Sulivan,wewereamongthetopthreglobalSiCsubstratemanufacturersintermsofrevenue

fromSiCsubstratesalesin2024withamarketshareof16.7%.Se“IndustryOverview.”

SUMARYOFHISTORICALANDFINANCIALINFORMATION

Thetablesbelowpresentoursumaryconsolidatedfinancialdataderivedfromour

consolidatedstatementsofprofitorlosandothercomprehensiveincomeandconsolidatedcash

flowstatementsfortheyearsendedDecember31,2022,2023,2024andthethremonthsended

March31,2024and2025andourconsolidatedstatementsofinancialpositionasofDecember31,

2022,2023,2024andMarch31,2025includedintheAcountants’ReportinApendixItothis

prospectus.Thefolowingdatandiscusionshouldbereadinconjunctionwithourconsolidated

financialstatementsandrelatednotesandthesectionheaded“FinancialInformation.”

SUMARY

---

KeyItemsoftheConsolidatedStatementsofProfitorLosandOtherComprehensiveIncome

Thefolowingtablesetsforthasumaryofourconsolidatedresultsofoperationsforthe

periodspresented:

YearEnded

December31,

Thremonthsended

March31,

(RMBinthousands)

(unaudited)

Revenue

.

417,0351,250,6961,768,141426,068407,961

Costofsales

.

(449,987)(1,068,660)(1,332,688)(334,322)(315,521)

Gros(los)/profit

.

(32,952)182,036435,45391,74692,440

Otherincome

.

2,08251760737168

Othergainsandloses,net

.

51,53354,85288,94523,72017,985

Netinvestmentincome/(expense)

.

36,22723,268762917(215)

Reversal/(provision)ofimpairmentloseson

financialasets

.

1,057(10,972)(10,166)(2,828)1,038

Selingexpenses

.

(13,931)(20,427)(28,827)(4,057)(5,301)

Administrativexpenses

.

(111,531)(163,295)(189,438)(45,047)(52,283)

R&Dexpenses

.

(127,560)(137,210)(141,845)(22,283)(44,938)

Financeincome/(expense),net

.

18,13515,2205,9043,144(2,032)

Shareofresultsofasociate

.

—(148)(2,131)164(1,502)

(Los)/profitbeforetax

.

(176,940)(56,159)159,26445,5135,360

Incometaxcredit

.

1,25810,43919,7615873,158

(Los)/profitfortheyear/period

.

(175,682)(45,720)179,02546,1008,518

Non-IFRSFinancialMeasure

Tosuplementourconsolidatedfinancialstatements,whicharepresentedinacordancewith

IFRS,wealsouseadjustednet(los)/profit(non-IFRSmeasure)andadjustedEBITDA(non-IFRS

measure)asaditionalfinancialmeasure,whicharenotrequiredby,orpresentedinacordance

with,IFRS.Webelievethesenon-IFRSmeasuresfacilitatecomparisonsofoperatingperformance

fromyeartoyearandcompanytocompanybyeliminatingpotentialimpactsofcertainitems.

Webelievethesemeasuresprovideusefulinformationtoinvestorsandothersin

understandingandevaluatingourconsolidatedouresultsofoperationsinthesamemanerasthey

helpourmanagement.However,suchnon-IFRSfinancialmeasuresthatwepresentedmaynotbe

directlycomparabletosimilarmeasurespresentedbyothercompanies.Theuseofthesenon-IFRS

SUMARY

---

measureshaslimitationsasananalyticaltol,andshouldnotbeconsideredinisolationfrom,oras

substituteforanalysisof,ouresultsofoperationsorfinancialconditionasreportedunderIFRS.

Inadition,thenon-IFRSmeasuresmaybedefinediferentlyfromsimilartermsusedbyother

companies.

Wedefineadjustednetlos/profit(non-IFRSmeasure)fortheyear/periodasnetlosforthe

year/periodadjustedbyadingback:share-basedcompensationexpenses.Thefolowingtable

reconcilesouradjustednet(los)/profit(non-IFRSmeasure)andadjustedEBITDA(non-IFRS

measure),fromour(los)/profitfortheyear/periodinacordancewithIFRSindicatedfor2022,

2023,2024andthethremonthsendedMarch31,2024and2025:

YearendedDecember31,ThremonthsendedMarch31,

(RMBinthousands)

(unaudited)

Reconciliationof(los)/profitforthe

year/periodtoadjusted(los)/profitfor

theyear/period(non-IFRSmeasure):

(Los)/profitfortheyear/period

.

(175,682)(45,720)179,02546,1008,518

Ad:

—Share-basedcompensationexpenses

(1)

.

—10,209—5,194

Adjustednet(los)/profit(non-IFRS

measure)

.

(175,682)(45,720)189,23446,10013,712

Ad:

Interestexpenses

.

1272178,3351535,953

Depreciationandamortization

.

146,108226,754358,42385,67694,063

Incometaxespaid

.

—2904,8671,4372,956

Les:

Interestincomefrombankdeposits

.

(18,262)(15,437)(14,239)(3,297)(3,921)

Incometaxesrefunded

.

(709)—

AdjustedEBITDA(non-IFRSmeasure)

.

(48,418)166,104546,620130,069112,763

Note:

(1)Share-basedpaymentsrelatetothenon-cashemployebenefitexpensesincuredinconectionwithourawardsto

managementandkeyemployes.

SUMARY

---

Werecordedanetlosandanadjustednetlos(non-IFRSmeasure)ofRMB175.7milionin

2022,primarilydueto(i)thegroslosincuredthisyear,resultingfromthetemporary

constraintsonproductioncapacityandactualproductioncausedbyadjustmentstoproductionline

procesesduringtheinitialphaseofourproductportfolioadjustment,and(i)increased

administrativexpensesandR&Dexpensestosuportourbusinesgrowth.

Ournetlosandadjustednetlos(non-IFRSmeasure)narowedtoRMB45.7milionin

2023,primarilyduetoagrosprofitofRMB182.0milionin2023,mainlyatributabletothe

gradualtransitionfromprimarilyproducingsemi-insulatingSiCsemiconductormaterialto

primarilyproducingconductiveSiCsemiconductormaterialandthereleaseofproductioncapacity,

partialyofsetbyincreasedadministrativexpensesandR&Dexpensestosuportourbusines

growth.

In2024,weturnedaroundourlos-makingpositionwithanetprofitofRMB179.0milion

andanadjustednetprofit(non-IFRSmeasure)ofRMB189.2milion,primarilyduetour

improvementingrosprofitmarginonbothconductiveandsemi-insulatingSiCsemiconductor

materialsresultingfromeconomiesofscaleandthecontinuedreleaseofproductioncapacityatour

Shanghaiproductionplant,benefitingfromitsramp-up,leadingtoloweraveragecostsonproducts

sold,partialyofsetbyincreasedoperatingexpenses,includingselingexpenses,administrative

expensesandR&Dexpenses.

OurnetprofitdecreasedfromRMB46.1milioninthethremonthsendedMarch31,2024to

RMB8.5milioninthesameperiodof2025.Ouradjustednetprofit(non-IFRSmeasure)decreased

fromRMB46.1milioninthethremonthsendedMarch31,2024toRMB13.7milioninthesame

periodof2025.Thedecreaseswereprimarilydueto(i)anincreaseinR&Dexpenses,mainly

resultingfrom(a)relativelylowerR&Dexpenses,particularlyfortestingmaterials,recordedin

thethremonthsendedMarch31,2024,and(b)increasedinvestmentinlarge-diameterSiC

substratesandintheaplicationofSiCsubstratesinemergingmarkets,suchasARglases,inthe

sameperiodin2025,and(i)anincreaseinadministrativexpenses,mainlyresultingfrom(a)

higherdepreciationandamortizationinrelationtofixedasetsusedforadministrativepurposes,

and(b)increasedprofesionalservicexpenses,mainlyconsultingfesinrelationtourplant

constructionandoverseasinvestment.

Se“FinancialInformation—Period-To-PeriodComparisonofResultsofOperations.”

SUMARY

---

Revenue

DuringtheTrackRecordPeriod,wemainlyderivedourevenuefromsalesofconductiveSiC

semiconductormaterialandsemi-insulatingSiCsemiconductormaterial.Thefolowingtablesets

forthourevenuebreakdownbyproductypeinabsoluteamountandasapercentageofourtotal

revenue,fortheperiodsindicated:

YearendedDecember31,ThremonthsendedMarch31,

Amount%Amount%Amount%Amount%Amount%

(RMBinthousands,exceptforpercentages)

(unaudited)

SalesofSiCsemiconductor

material

ConductiveSiCsemiconductor

material

.

168,32840.4977,62478.21,340,72775.8304,37571.4259,06463.5

Semi-insulatingSiC

semiconductormaterial

.

157,69137.8108,1788.6132,9617.528,9506.870,20417.2

Sub-total

.

326,01978.21,085,80286.81,473,68883.3333,32578.2329,26880.7

Others

(1)

.

91,01621.8164,89413.2294,45316.792,74321.878,69319.3

Total

.

417,035100.01,250,696100.01,768,141100.0426,068100.0407,961100.0

Note:

(1)Othersprimarilyinclude(i)otherSiCproductsthatdonotmetsemiconductor-gradespecificationsacordingto

ourinternalclasificationstandards,suchasmoisanitegemstones,whichareprimarilyusedinresearchand

customergodsaplication,and(i)rentalincome.

Thefolowingtablesetforthabreakdownofoursalesvolumeandaveragesalespriceby

productypefortheperiodsindicated:

YearendedDecember31,ThremonthsendedMarch31,

Piece%Piece%Piece%Piece%Piece%

ConductiveSiCsemiconductor

material

.

35,35555.4197,04687.1324,23889.877,38490.977,50179.3

Semi-insulatingSiC

semiconductormaterial

.

28,44044.629,25612.936,95310.27,7769.120,22220.7

Total

.

63,795100.0226,302100.0361,191100.085,160100.097,723100.0

SUMARY

---

YearendedDecember31,ThremonthsendedMarch31,

(RMBperpiece)

ConductiveSiCsemiconductor

material

.

4,7614,9614,1353,9333,343

Semi-insulatingSiC

semiconductormaterial

.

5,5453,6983,5983,7233,472

GrosProfit/(Los)andGrosMargin

Ourgrosprofit/(los)representsourevenuelesourcostofsales,andourgrosmargin

representsgrosprofit/(los)dividedbyourevenue,expresedasapercentage.Thetablebelow

setsforthabreakdownofourgrosprofit/(los)andgrosmarginbyproductypefortheperiods

indicated:

YearendedDecember31,ThremonthsendedMarch31,

Gros

profit/(los)

Gros

margin

Gros

profit/(los)

Gros

margin

Gros

profit/(los)

Gros

margin

Gros

profit/(los)

Gros

margin

Gros

profit/(los)

Gros

margin

(RMBinthousands,exceptforpercentages)

(unaudited)

SalesofSiCsemiconductor

material

ConductiveSiCsemiconductor

material

.

(35,822)(21.3)222,59322.8432,21232.293,34630.764,95025.1

Semi-insulatingSiC

semiconductormaterial

.

26,26716.7(47,825)(44.2)35,42626.63981.418,14325.8

Sub-total

.

(9,555)(2.9)174,76816.1467,63831.793,74428.183,09325.2

Others

.

(23,397)(25.7)7,2684.4(32,185)(10.9)(1,998)(2.2)9,34711.9

Total

.

(32,952)(7.9)182,03614.6435,45324.691,74621.592,44022.7

Se“FinancialInformation—Period-To-PeriodComparisonofResultsofOperations.”

SUMARY

---

SelectedItemsfromtheConsolidatedStatementsofFinancialPosition

Thefolowingtablesetsforthselectedinformationfromourconsolidatedbalanceshetsasof

thedatesindicated,whichavebenextractedfromourconsolidatedfinancialstatementsincluded

inApendixItothisprospectus:

AsofDecember31,

Asof

March31,

(RMBinthousands)

Totalcurentasets

.

3,314,0662,803,8673,124,6533,350,083

Totalnon-curentasets

.

2,539,1604,107,4864,232,0524,198,983

Totalasets

.

5,853,2266,911,3537,356,7057,549,066

Totalcurentliabilities

.

312,9581,303,7441,542,7751,553,198

Totalnon-curentliabilities

.

289,804381,086500,948667,384

Totaliabilities

.

602,7621,684,8302,043,7232,220,582

Netcurentasets

.

3,001,1081,500,1231,581,8781,796,885

Totalequity

.

5,250,4645,226,5135,312,9825,328,484

OurnetcurentasetsincreasedfromRMB1,581.9milionasofDecember31,2024tonet

curentasetsofRMB1,796.9milionasofMarch31,2025,primarilyduetoanincreaseof

RMB235.6milionincashandbankbalances.

OurnetcurentasetsremainedrelativelystableatRMB1,500.1milionasofDecember31,

2023andRMB1,581.9milionasofDecember31,2024.

OurnetcurentasetsdecreasedfromRMB3,001.1milionasofDecember31,2022to

RMB1,500.1milionasofDecember31,2023,primarilydueto(i)adecreaseofRMB1,514.4

milioninfinancialasetsatfairvaluethroughprofitorlos,and(i)anincreaseofRMB916.6

milionintradeandotherpayables,partialyofsetby(i)anincreaseofRMB344.9milionincash

andbankbalances,(i)anincreaseofRMB310.0milionininventories,and(i)anincreaseof

RMB216.8milionintradereceivablesandothereceivables.

WerecordedtotalequityofRMB5,250.5milionasofDecember31,2022.AsofDecember

31,2023,wehadtotalequityofRMB5,226.5milion,primarilyatributabletoalosfortheyear

of2023ofRMB45.7milion,ofsetbyanincreaseincapitalreserveofRMB23.5milionfrom

shareofpost-acquisitionsharepremiumofanasociate.Ourtotalequitythenincreasedto

RMB5,313.0milionasofDecember31,2024,primarilyduetoprofitforyearendedDecember

SUMARY

---

31,2024ofRMB179.0milion,partialyofsetbyrepurchaseofsharesofRMB100.2milion.Our

totalequityremainedrelativelystableatRMB5,313.0milionandRMB5,328.5milionasof

December31,2024andMarch31,2025.PleasesetheConsolidatedStatementsofChangesin

EquitytotheAcountants’ReportincludedinApendixItothisprospectus.

SumaryoftheConsolidatedStatementsofCashFlow

Thefolowingtablesetsforthasumaryofourcashflowsfortheperiodsindicated:

YearEndedDecember31,ThremonthsendedMarch31,

(RMBinthousands)

(unaudited)

Netcash(usedin)/generatedfromoperating

activities

.

(64,421)(68,110)30,434(81,336)143,965

Netcash(usedin)/generatedfrominvesting

activities

.

(2,774,694)204,570(257,137)88,831(120,034)

Netcashgeneratedfrom/(usedin)financing

activities

.

3,178,744(5,982)571,06440,067219,249

Netincreaseincashandcashequivalents

.

339,629130,478344,36147,562243,180

Cashandcashequivalentsathebegining

oftheyear/period

.

342,586682,492811,593811,5931,155,456

Efectofexchangeratechanges

.

277(1,377)(498)8903,428

Cashandcashequivalentsathendof

theyear/period

.

682,492811,5931,155,456860,0451,402,064

Netcashusedinoperatingactivitiesprimarilycomprisesourlosbeforetaxationforthe

year/periodadjustedby:(i)non-cashandnon-operatingitems,and(i)changesinworkingcapital.

InthethremonthsendedMarch31,2025,ournetcashgeneratedfromoperatingactivities

wasRMB144.0milion.Ournetcashgeneratedfromoperatingactivitiesiscalculatedbyadjusting

ourprofitbeforetaxationofRMB5.4milionbynon-cashandotheritemstoariveatanoperating

profitbeforechangesinworkingcapitalofRMB112.6milion.Ourmovementsinworkingcapital

primarilyreflectadecreaseinothercurentasetsofRMB59.8milion,andadecreaseintrade

andothereceivablesofRMB24.6milion,partialyofsetbyanincreaseinprepaymentsof

RMB59.1milion.

SUMARY

---

In2024,ournetcashgeneratedfromoperatingactivitieswasRMB30.4milion.Ournetcash

generatedfromoperatingactivitiesiscalculatedbyadjustingourprofitbeforetaxationof

RMB159.3milionbynon-cashandotheritemstoariveatanoperatingprofitbeforechangesin

workingcapitalofRMB555.5milion.Ourmovementsinworkingcapitalprimarilyreflectan

increaseininventoriesofRMB200.6milionandanincreaseintradeandothereceivablesof

RMB188.4milion,partialyofsetbyadecreaseintradeandotherpayablesofRMB137.3

milion.

In2023,ournetcashusedinoperatingactivitieswasRMB68.1milion.Ournetcashusedin

operatingactivitiesiscalculatedbyadjustingourlosbeforetaxationofRMB56.2milionby

non-cashandotheritemstoariveatanoperatingprofitbeforemovementsinworkingcapitalof

RMB159.2milion.Ourmovementsinworkingcapitalprimarilyreflect(i)anincreaseinrestricted

cashofRMB197.7milion,(i)anincreaseininventoriesofRMB325.7milionand(i)an

increaseintradeandothereceivablesofRMB226.7milion,partialyofsetbyincreaseintrade

andotherpayablesofRMB553.4milion.

In2022,ournetcashusedinoperatingactivitieswasRMB64.4milion.Ournetcashusedin

operatingactivitiesiscalculatedbyadjustingourlosbeforetaxationofRMB176.9milionby

non-cashandotheritemstoariveatanoperatinglosbeforemovementsinworkingcapitalof

RMB77.3milion.Ourmovementsinworkingcapitalprimarilyreflectanincreaseininventories

ofRMB156.7milion,andanincreaseinprepaymentsofRMB46.7milion,partialyofsetbyan

increaseintradeandotherpayablesofRMB137.2milion.

Werecordednetoperatingcashoutflowsin2022and2023,primarilyduetothesignificant

amountsofcostofsalesandoperatingexpensesincuredinconectionwithourproduction,R&D

andadministrativeactivities.Wehavesucesfulyfromanetoperatingcashoutflowin2022and

2023toanetoperatingcashinflowin2024andthremonthsendedMarch31,2025,primarily

dueto:(i)sustainedrevenuegrowthdrivenbyproductinovation,productionexpansion,and

customerbasegrowth;(i)rigorouscostcontrolmeasurestoenhanceficiency;and(i)strategic

managementofoperatingexpensesandworkingcapitaloptimization.Se“FinancialInformation

—LiquidityandCapitalResources—NetCash(Usedin)/GeneratedfromOperatingActivities.”

SUMARY

---

SELECTEDFINANCIALRATIOS

Thefolowingtablesetsforthourkeyfinancialratiosasofandfortheperiodsindicated:

Asofandfortheyearended

December31,

Asofandfor

thethre

monthsended

March31,

Revenuegrowthrate

(1)

.

—199.9%41.4%(4.2%)

Grosprofit/(los)margin

(2)

.

(7.9%)14.6%24.6%22.7%

AdjustedEBITDAmargin

(non-IFRSmeasure)

(3)

.

(11.6%)13.3%30.9%27.6%

Curentratio

(4)

.

10.62.22.02.2

Quickratio

(5)

.

8.91.51.41.5

Debt-to-asetratio

(6)

.

10.3%24.4%27.8%29.4%

Cashconversioncycle

(7)

.

362.3148.5160.2248.9

Notes:

(1)Revenuegrowthrateiscalculatedastheyear-on-yeargrowthrateofrevenueandthegrowthrateofrevenueforthe

thremonthsendedMarch31,2025comparedtothethremonthsendedMarch31,2024.

(2)Grosprofit/(los)marginequalsgrosprofit/(los)fortheperiodividedbyrevenuefortheperiodandmultiplied

by100%.

(3)AdjustedEBITDAmargin(non-IFRSmeasure)equalsadjustedEBITDA(non-IFRSmeasure)dividedbyrevenue

andmultipliedby100%.

(4)Curentratioequalscurentasetsdividedbycurentliabilitiesasoftherelevantperiodend.

(5)Quickratioequalscurentasetsexcludinginventoriesdividedbycurentliabilitiesasoftherelevantperiodend.

(6)Debt-to-AsetRatioequalstotaliabilitiesdividedbytotalasetsmultipliedby100%.

(7)Cashconversioncycleiscalculatedusingtheinventoryturnoverdaysineachperiodplusthetradereceivable

turnoverdaysintherespectiveperiodminusthetradepayablesturnoverdaysintherespectiveperiod.

SUMARY

---

RISKFACTORS

OurbusinesandtheGlobalOferinginvolvecertainrisksasetoutin“RiskFactors”inthis

prospectus.Youshouldreadthatsectioninitsentiretycarefulybeforeyoudecidetoinvestinour

Shares.Webelievethemostsignificantriskswefaceincludebutarenotlimitedtothefolowing:

(cid:129)Ourhistoricalresultsmaynotbeindicativeofourfutureperformance,andwemaynot

besucesfulinexpandingouroperationsormanagingourgrowth;

(cid:129)Ourperformanceisubjectodemandsfromourdownstreamindustriesthatadoptour

productsandfluctuationsinrawmaterialsuplies.Slowdowninthegrowthofthese

downstreamindustriescouldadverselyafectourbusines,financialconditionand

resultsofoperations;

(cid:129)Ifwefailtodevelopnewproductsthatadrescustomerpreferencesandachievemarket

aceptanceinatimelyandcost-efectivemaner,ouresultsofoperationscouldbe

adverselyafected;

(cid:129)Thesemiconductormaterialindustryishighlycompetitive.Ifwearenotableto

competesucesfuly,ourbusines,resultsofoperationsandfutureprospectswilbe

harmed;and

(cid:129)Ourbusines,financialconditionandresultsofoperationsmaybematerialyand

adverselyafectedbyinternationalpolicies,internationalexportcontrolsandeconomic

sanctions.

Se“RiskFactors.”

OURCONTROLINGSHAREHOLDERS

AsoftheLatestPracticableDate,Mr.Zongwasinterestedinaproximately38.48%ofour

totalisuedsharecapital,comprising(i)aproximately30.09%ofourtotalisuedsharecapital

directlyheldbyhim,(i)aproximately5.38%ofourtotalisuedsharecapitalcontroledbyMr.

Zonginhiscapacityasthesolexecutiveandgeneralpartnerofouremployeshareholding

platformShanghaiMaiming,and(i)aproximately3.00%ofourtotalisuedsharecapital

controledbyMr.Zonginhiscapacityasthesolexecutiveandgeneralpartnerofouremploye

shareholdingplatformShanghaiZhuao.Acordingly,Mr.Zong,ShanghaiMaimingandShanghai

ZhuaoconstituteagroupofControlingShareholdersbeforetheListing.

SUMARY

---

ImediatelyfolowingthecompletionoftheGlobalOfering(asuming(i)the

Over-alotmentOptionisnotexercised,(i)nonewSharesareisuedunderour2024Restricted

ShareIncentiveSchemeand(i)notherchangesaremadetotheisuedsharecapitalofour

CompanybetwentheLatestPracticableDateandListing),Mr.Zongwilcontinuetocontrol,

directlyandindirectly(throughShanghaiMaimingandShanghaiZhuao,ouremploye

shareholdingplatformscontroledbyMr.Zong),thexerciseofaproximately34.63%voting

rightsofthenlargedisuedsharecapitalofourCompany.Therefore,Mr.Zong,Shanghai

MaimingandShanghaiZhuaowilremainasagroupofControlingShareholdersofourCompany.

ForfurtherdetailsaboutourControlingShareholders,pleasesethesectionheaded

“RelationshipwithOurControlingShareholders.”

USEOFPROCEDS

AsumingthatheOver-alotmentOptionisnotexercised,afterdeductingtheunderwriting

comisionsandotherestimatedoferingexpensespayablebyusinconectionwiththeGlobal

Ofering,andasuminganOferPriceofHK$42.80perHShare,westimatethatwewilreceive

netprocedsofaproximatelyHK$1,938.1milionfromtheGlobalOfering.Weintendtousethe

netprocedsfromtheGlobalOferingforthepurposesandintheamountsetforthbelow.

(cid:129)Aproximately70%ofthenetproceds,orHK$1,356.7milion,wilbeusedtoexpand

ourproductioncapacityfor8-inchandlargerSiCsubstrates;

(cid:129)Aproximately20%ofthenetproceds,orHK$387.6milion,wilbeusedto

strengthenourR&Dcapabilitiesandmaintainourleadershipininovation;

(cid:129)Aproximately10%ofthenetproceds,orHK$193.8milion,wilbeusedasworking

capitalandforothergeneralcorporatepurposestosuportourday-to-dayoperations

andfuturebusinesdevelopment.

RECENTDEVELOPMENTANDNOMATERIALADVERSECHANGE

RecentDevelopment

InthesixandahalfmonthsendedJune15,2025,ourbusinesoperationsremainedrelatively

stable,andwecontinuedtoimplementmeasurestoreducethecostofsalesandachievebeter

operatingeficiency.

SUMARY

---

InMarch2025,welaunchedournewproducts,includingour12-inchighpuritySiC

substrate,12-inchN-typeSiCsubstrate

(1)

and12-inchP-typeSiCsubstrate,atSEMICONChina

2025,whichsignifiedourbreakthroughsincrystalgrowth,defectcontrol,procesingand

inspectionaswelasin-housecomponentmanufacturing.

NoMaterialAdverseChange

OurDirectorsconfirmthat,uptothedateofthisprospectus,therehasbenomaterial

adversechangeinourfinancialortradingpositionorprospectsinceMarch31,2025,beingthe

endateoftheperiodsreportedonintheAcountant’sReportinApendixItothisprospectus,

andthereisnoeventsinceMarch31,2025thatwouldmaterialyafectheinformationasetout

intheAcountant’sReportinApendixItothisprospectus.

LISTINGOFOURASHARESONTHESTARMARKET

SinceJanuary12,2022,ourAShareshavebenlistedontheSTARMarketoftheShanghai

StockExchange(stockcode:688234)(the“A-SharesListing”).SinceourA-SharesListingandas

oftheLatestPracticableDate,ourDirectorsconfirmedthatwehadnoinstanceofmaterial

non-compliancewiththerulesoftheShanghaiStockExchangeandotheraplicablesecurities

lawsandregulationsofthePRCinanymaterialrespects,and,tothebestknowledgeofour

Directorshavingmadealreasonablenquiries,therewasnomaterialmaterthatshouldbe

broughtotheinvestors’atentioninrelationtourcompliancerecordontheSTARMarket.Based

ontheindependentduediligenceconductedbytheJointSponsors,nothinghascometotheJoint

Sponsors’atentionthatwouldcausethemtodisagrewithourDirectors’confirmationwithregard

tothecompliancerecordsoftheCompanyontheSTARMarket.

APLICATIONFORLISTINGOFTHEHSHARESONTHEHONGKONGSTOCK

EXCHANGE

WehaveapliedtotheHongKongStockExchangeforthegrantingofthelistingof,and

permisiontodealin,ourHSharestobeisuedpursuantotheGlobalOferingonthebasisthat,

amongotherthings,wesatisfythemarketcapitalisation/revenuetestunderRule8.05(3)ofthe

HongKongListingRuleswithreferenceto(a)ourexpectedmarketcapitalisationofaproximately

HK$30,295milionupontheListing(basedon(i)47,745,700HSharesexpectedtobeisued

pursuantotheGlobalOfering(asumingthatheOver-alotmentOptionisnotexercised)andan

OferPriceofHK$42.80perHShare;and(i)429,711,044ASharesinisuewithanaverage

closingpriceforthefivebusinesdaysimediatelypriortotheLatestPracticableDateof

(1)SiCmaterialdopedwithelementsuchasnitrogentocreateanexcesofrelectronswhichcanenhanceits

conductivityandmakesitsuitableforhigh-powerelectronicdevices

SUMARY

---

RMB59.88(equivalentoaproximatelyHK$65.75)perAShare,whichismorethan

HK$4,000,000,000athetimeoflisting;and(b)ourevenuefortheyearendedDecember31,

2024ofaproximatelyRMB1,768.1milion(equivalentoaproximatelyHK$1,919.0milion),

whichismorethanHK$500,000,000forthemostrecentauditedfinancialyear.

OFERINGSTATISTICS

BasedonanOferPriceof

HK$42.80perHShare

MarketcapitalizationofourSharesimediatelyaftercompletionofthe

GlobalOfering

(1)

.

HK$30,295milion

MarketcapitalizationofourHSharesimediatelyaftercompletionof

theGlobalOfering

(1)

.

HK$2,044milion

UnauditedproformadjustednetangibleasetsperShare

(2)

.

HK$16.34

(1)Thecalculationofmarketcapitalizationisbasedon(i)47,745,700HSharesexpectedtobeisuedpursuantothe

GlobalOfering(asumingthatheOver-alotmentOptionisnotexercised);and(i)429,711,044ASharesinisue

withanaverageclosingpriceforthefivebusinesdaysimediatelypriortotheLatestPracticableDateof

RMB59.88(equivalentoaproximatelyHK$65.75)perAShare,representinginagregate477,456,744Shares

expectedtobeinisueimediatelyfolowingthecompletionoftheGlobalOfering(asumingtheOver-alotment

Optionarenotexercised).Fordetails,se“ShareCapital—UponCompletionoftheGlobalOfering”inthis

prospectus.

(2)TheunauditedproformadjustednetangibleasetsofourGroupatributabletownersoftheCompanyasof

March31,2025perShareiscalculatedbasedonatotalof475,450,860shares(representing429,711,044sharesin

isueasofMarch31,2025,excluding2,005,884treasurysharesasofMarch31,2025,ading47,745,700ofer

sharesundertheGlobalOfering),asumingthatheGlobalOferinghadbencompletedonMarch31,2025but

doesnotakeintoacountofanyshareswhichmaybeisueduponthexerciseoftheover-alotmentoptionand

uponthevestingofrestrictedsharesthathavebenormaybegrantedfromtimetotimeundertherestrictedshare

scheme.

(3)NoadjustmenthasbenmadetotheunauditedproformadjustednetangibleasetsoftheGrouptoreflectany

tradingresultsorothertransactionsofourGroupenteredintosubsequentoMarch31,2025.

DIVIDENDPOLICY

OurArticlesofAsociationrequireustodistributecashdividendsofnolesthan30%ofthe

averageanualdistributableprofitunderthePRCGAPinanyrolingthre-yearperiod,subject

tosignificantinvestmentorcapitalexpenditureplans,workingcapitalrequirementsandothercash

dividendconditionstipulatedinourCompany’sArticlesofAsociation.Wedistributedividends

primarilyintheformofcash,butmayalsodistributedividendsintheformofstocksora

combinationofcashandstocks.Ifdividendsinanydistributionconsistsofbothcashandstocks,

thecashdividendshalcomprisenotlesthan20%ofsuchdistribution.Anyproposed

distributionofdividendsisubjectothediscretionofourBoardandtheaprovalofour

SUMARY

---

Shareholders.OurBoardmayrecomendadistributionofdividendsinthefutureaftertakinginto

acountouresultsofoperations,financialcondition,operatingrequirements,capitalrequirements,

shareholders’interestsandanyotherconditionsthatourBoardmaydemrelevant.

NodividendwaspaidordeclaredbyourCompanyorotherentitiescomprisingourGroup

duringtheTrackRecordPeriod.AsofDecember31,2024,ourCompanydidnotrecord

acumulatedlosesacordingtotheCompany’sunconsolidatedfinancialstatementsin2024.

PursuantotheRulesforShareRepurchasebyListedCompanies(《上市公司股份回购规则》)and

theShanghaiStockExchange’sSelf-RegulatoryGuidelinesNo.7—sharerepurchase(《上海证券交易所

上市公司自律监管指引第7号—回购股份》),theRMB100,218,531.64sharerepurchasescompleted

in2024areclasifiedascashdividends,constitutingaformalshareholdereturnmechanism.

Consideringvariousfactorsuchasindustrydynamics,corporatedevelopmentstage,andour

Company’sresultsofoperations,includingtheacumulatedlosesonourconsolidatedfinancial

statementsin2024thathavenotbenmadeup,ourBoardproposednotodeclarecashdividends,

capitalreserveconversions,orbonusisuesfor2024,toprotecthelong-terminterestsofal

shareholdersandtosafeguardoursustainabledevelopmentandcapitaladequacyonMarch27,

2025.OnMay16,2025,theShareholders’metingaprovedtheaforementionedproposal.As

confirmedbyourPRCLegalAdvisor,giventhatourCompanydidnotrecordacumulatedloses

acordingtotheCompany’sunconsolidatedfinancialstatementsfor2024,ourCompanycandecide

independentlywhethertopaydividendsaftersetingasidetherequiredstatutorycomonreserve

fundsinacordancewithourArticlesofAsociationandtheaplicablePRClaws.

LISTINGEXPENSES

Listingexpensesrepresentprofesionalfes,underwritingcomision,andotherfes

incuredinconectionwiththeGlobalOfering.Westimatethatourlistingexpenseswilbe

aproximatelyHK$105.4milion(asumingtheOver-alotmentOptionisnotexercisedandbased

ontheOferPriceofHK$42.80),whichacountsforaproximately5.16%ofthegrosproceds

fromtheGlobalOfering.WestimatethelistingexpensestoconsistofaproximatelyHK$61.3

milioninunderwritingfesandHK$44.1milioninon-underwritingfes(whichconsistofes

andexpensesoflegaladvisorsandourReportingAcountantofaproximatelyHK$24.9milion

andotherfesandexpensesofaproximatelyHK$19.2milion).Amongthetotalistingexpenses,

aproximatelyHK$94.6milionwilbedirectlyatributabletotheisueofourShares,whichwil

bedeductedfromequityuponthecompletionoftheGlobalOfering,andtheremaining

aproximatelyHK$10.8milionwilbexpensedinourconsolidatedstatementsofcomprehensive

los.

SUMARY

---

Inthisprospectus,unlesthecontextotherwiserequires,thefolowingtermsand

expresionshalhavethefolowingmeanings.Certainothertermsarexplainedinthesection

heads“GlosaryofTechnicalTerms”inthisprospectus.

“AShare(s)”ordinarysharesisuedbyourCompany,withanominal

valueofRMB1.00each,whicharelistedontheSTAR

MarketandtradedinRenminbi

“Acountant”BDOLimited

“Acountant’sReport”theacountant’sreportofourCompanyisuedbythe

Acountantasetoutin“ApendixI—Acountant’s

Report”ofthisprospectus

“afiliate”withrespectoanyspecifiedperson,anyotherperson,

directlyorindirectly,controlingorcontroledbyorunder

directorindirectcomoncontrolwithsuchspecified

person

“AFRC”theAcountingandFinancialReportingCouncil

“Articles”or“Articlesof

Asociation”

thearticlesofasociationofourCompany,adoptedon

February19,2025withefectfromtheListingDate,a

sumaryofwhichisetoutinApendixVtothis

prospectus

“AuditComite”theauditcomiteoftheBoardofourCompany,the

detailsofwhicharedescribedin“CorporateInformation”

inthisprospectus

“BeijingTianyue”BeijingTianyueAdvancedTechnologyLtd.(北京天岳先进

科技有限公司),alimitedliabilitycompanyestablished

underthelawsofthePRConJanuary5,2024,anda

wholy-ownedsubsidiaryofourCompany

“Board”or“BoardofDirectors”theboardofdirectorsofourCompany

“businesday”anyday(otherthanaSaturday,Sundayorpublicholidayin

HongKong)onwhichbanksinHongKongaregeneraly

openfornormalbankingbusines

DEFINITIONS

---

“CapitalMarketIntermediary(ies)”

or“CMI(s)”

hasthemeaningiventoitintheListingRulesand,unles

thecontextrequiresotherwise,referstothecapitalmarket

intermediariesnamedin“Directors,SupervisorsandParties

InvolvedintheGlobalOfering”inthisprospectus

“CAS”TheCentralClearingandSetlementSystemestablished

andoperatedbyHKSC

“China”orthe“PRC”ThePeople’sRepublicofChina,butforthepurposeofthis

prospectusandforgeographicalreferenceonlyandexcept

wherethecontextrequires,referencesinthisprospectusto

“China”andthe“PRC”donotaplytoHongKong,Macau

SpecialAdministrativeRegionandTaiwan,China

“CompaniesOrdinance”theCompaniesOrdinance(Chapter622oftheLawsof

HongKong),asamended,suplementedorotherwise

modifiedfromtimetotime

“Companies(WindingUpand

MiscelaneousProvisions)

Ordinance”

theCompanies(WindingUpandMiscelaneousProvisions)

Ordinance(Chapter32oftheLawsofHongKong),as

amended,suplementedorotherwisemodifiedfromtimeto

time

“Company”,“ourCompany”or“the

Company”or“we”or“us”

SICo.,Ltd.(山东天岳先进科技股份有限公司),ajoint

stockcompanyincorporatedinthePRConNovember2,

2010,theASharesofwhichavebenlistedontheSTAR

Market(stockcode:688234)

“ComplianceAdvisor”SomerleyCapitalLimited

“conectedperson(s)”hasthemeaningascribedtoitundertheListingRules

“conectedtransaction(s)”hasthemeaningascribedtoitundertheListingRules

“ControlingShareholdersGroup”

or“ControlingShareholders”

hasthemeaningascribedtoitundertheListingRulesand

unlesthecontextrequiresotherwise,referstoMr.Zong,

ShanghaiMaimingandShanghaiZhuao,colectivelythe

controlingshareholdersofourCompany;priortothe

ListingandasatheLatestPracticableDate,the

controlingshareholderscontroledaproximately38.48%

ofourtotalsharecapital,anduponListing,theywil

remainasourCompany’scontrolingshareholders

DEFINITIONS

---

“CSRC”theChinaSecuritiesRegulatoryComision(中国证券监

督管理委员会)

“COVID-19”aviralrespiratorydiseasecausedbythesevereacute

respiratorysyndromecoronavirus

“Director(s)”thedirector(s)ofourCompany

“EIT”thenterpriseincometax

“EITLaw”thePRCEnterpriseIncomeTaxLaw(《中华人民共和国企

业所得税法》),whichwaspromulgatedonMarch16,2007,

cameintoefectonJanuary1,2008,andwasmostrecently

amendedonDecember29,2018becomingefectiveonthe

samedate

“Experts”thexpertsetoutin“ApendixVI—Statutoryand

GeneralInformation—E.OtherInformation—4.

QualificationsandConsentsofExperts”ofthisprospectus

“ExtremeConditions”extremeconditionscausedbyasupertyphonas

anouncedbythegovernmentofHongKong

“FINI”“FastInterfaceforNewIsuance”,theonlineplatform

operatedbyHKSCthatismandatoryforadmisionto

tradingand,whereaplicable,thecolectionandprocesing

ofspecifiedinformationonsubscriptioninandsetlement

alnewlistings

“F&S”or“IndustryConsultant”Frost&Sulivan(Beijing)Inc.,ShanghaiBranchCo.,an

independentmarketresearchconsultant,whichisan

IndependentThirdParty

“GeneralRulesofHKSC”thetermsandconditionsregulatingtheuseofHKSC’s

services,asmaybeamendedormodifiedfromtimetotime

andwherethecontextsopermits,shalincludetheHKSC

OperationalProcedures

“GlobalOfering”theHongKongPublicOferingandtheInternational

Ofering

“Group,”“ourGroup,”“theGroup,”

“we,”“us”or“our”

theCompanyanditsubsidiariesfromtimetotime

DEFINITIONS

---

“Guide”GuideforNewListingAplicantsisuedbytheStock

Exchange,asamended,suplementedorotherwise

modifiedfromtimetotime

“HShare(s)”sharesinthesharecapitalofourCompanywithanominal

valueofRMB1.00each,tobelistedandtradedonthe

HongKongStockExchange

“HShareRegistrar”ComputershareHongKongInvestorServicesLimited

“HK$”or“HKD”or“HongKong

dolars”

HongKongdolars,thelawfulcurencyofHongKong

“HKSC”HongKongSecuritiesClearingCompanyLimited,a

wholy-ownedsubsidiaryofHongKongExchangesand

ClearingLimited

“HKSCEIPO”theaplicationfortheHongKongOferSharestobe

isuedinthenameofHKSCNominesandeposited

directlyintoCAStobecreditedtoyourdesignated

HKSCParticipant’stockacounthroughcausing

HKSCNominestoaplyonyourbehalf,byinstructing

yourbrokerorcustodianwhoisaHKSCParticipanto

givelectronicaplicationinstructionsviaFinitoaplyfor

theHongKongOferSharesonyourbehalf

“HKSCNomines”HKSCNominesLimited,awholy-ownedsubsidiaryof

HKSC

“HKSCOperationalProcedures”theOperationalProceduresofHKSC,containingthe

practices,proceduresandadministrativeorother

requirementsrelatingtoHKSC’servicesandthe

operationandfunctionsoftheCAS,FINIoranyother

platform,facilityorsystemestablished,operatedand/or

otherwiseprovidedbyorthroughHKSC,asfromtimeto

timeinforce

“HKSCParticipant”aparticipantadmitedtoparticipateinCASasadirect

clearingparticipant,ageneralclearingparticipantora

custodianparticipant

DEFINITIONS

---

“HongKong”or“HK”theHongKongSpecialAdministrativeRegionofthe

People’sRepublicofChina

“HongKongOferShares”the2,387,300HSharesinitialybeingoferedfor

subscriptionintheHongKongPublicOfering(subjecto

realocationasdescribedin“StructureoftheGlobal

Ofering”inthisprospectus)

“HongKongPublicOfering”theoferoftheHongKongOferSharesforsubscription

bythepublicinHongKong,onthetermsandsubjecto

theconditionsdescribedinthisprospectusasfurther

describedin“StructureoftheGlobalOfering”inthis

prospectus

“HongKongStockExchange”or

“StockExchange”

TheStockExchangeofHongKongLimited

“HongKongUnderwriters”theunderwritersoftheHongKongPublicOferinglistedin

“Underwriting”inthisprospectus

“HongKongUnderwriting

Agrement”

theunderwritingagrement,datedAugust8,2025,relating

totheHongKongPublicOferingandenteredintoamong

ourCompany,theJointSponsors,theSponsor-OCandthe

HongKongUnderwriters

“IFRS”theIFRSAcountingStandards,whichascolectiveterm

includesalaplicableindividualInternationalFinancial

ReportingStandards,InternationalAcountingStandards

andInterpretationsisuedbytheInternationalAcounting

StandardsBoard

“IndependentThirdParty(ies)”person(s)orcompany(ies),who/which,tothebestofour

Directors’knowledge,informationandbelief,is/arenotour

conectedperson(s)

DEFINITIONS

---

“InternationalOferShares”the45,358,400HSharesbeinginitialyoferedfor

subscriptionundertheInternationalOferingtogether,

whererelevant,withanyaditionalHSharesthatmaybe

isuedpursuantoanyexerciseoftheOver-alotment

Option(subjectorealocationasdescribedin“Structureof

theGlobalOfering”)

“InternationalOfering”theconditionalplacingoftheInternationalOferSharesby

theInternationalUnderwritersatheOferPriceoutsidethe

UnitedStatesinofshoretransactionsinrelianceon

RegulationS,onandsubjectothetermsandconditionsof

theInternationalUnderwritingAgrement,asfurther

describedin“StructureoftheGlobalOfering”

“InternationalUnderwriters”theunderwritersoftheInternationalOfering

“InternationalUnderwriting

Agrement”

theinternationalunderwritingagrement,expectedtobe

enteredintonorabouthePriceDeterminationDate,

relatingtotheInternationalOfering,byourCompany,the

JointSponsors,theSponsor-OCandtheInternational

Underwriters,asfurtherdescribedin“Underwriting—

UnderwritingArangementsandExpenses—International

Ofering—InternationalUnderwritingAgrement”inthis

prospectus

“JiningNewMaterial”JiningTianyueSemiconductorNewMaterialCo.,Ltd.(济

宁天岳半导体新材料有限公司)(formerlyknownasJining

TianyueGraphiteProductsCo.,Ltd.(济宁天岳石墨制品有

限公司)andrenamedascurentnameinApril2025),a

limitedliabilitycompanyestablishedunderthelawsofthe

PRConJune5,2023,awholy-ownedsubsidiaryofour

Company

“JointBokruners”thejointbokrunersasnamedin“Directors,Supervisors

andPartiesInvolvedintheGlobalOfering”ofthis

prospectus

“JointGlobalCordinators”thejointglobalcordinatorsasnamedin“Directors,

SupervisorsandPartiesInvolvedintheGlobalOfering”of

thisprospectus

DEFINITIONS

---

“JointLeadManagers”thejointleadmanagersasnamedin“Directors,Supervisors

andPartiesInvolvedintheGlobalOfering”ofthis

prospectus

“JointSponsors”hasthemeaningiventoitintheListingRulesand,unles

thecontextrequiresotherwise,referstothejointsponsors

namedin“Directors,SupervisorsandPartiesInvolvedin

theGlobalOfering”inthisprospectus

“LatestPracticableDate”August3,2025,beingthelatestpracticabledatefor

ascertainingcertaininformationinthisprospectusbefore

itspublication

“Listing”thelistingoftheSharesontheMainBoard

“ListingComite”theListingComiteoftheHongKongStockExchange

“ListingDate”thedate,expectedtobeonoraroundTuesday,August19,

2025,onwhichourHSharesarelistedandfromwhich

dealingsthereinarepermitedtotakeplaceontheHong

KongStockExchange

“ListingRules”or“HongKong

ListingRules”

theRulesGoverningtheListingofSecuritiesonTheStock

ExchangeofHongKongLimited,asamended,

suplementedorotherwisemodifiedfromtimetotime

“MainBoard”thestockmarket(excludingtheoptionmarket)operatedby

theStockExchangewhichisindependentfromand

operatedinparalelwiththeGEMoftheStockExchange

“MOF”theMinistryofFinanceofthePeople’sRepublicofChina

(中华人民共和国财政部)

“MOFCOM”MinistryofComerceofthePRC(中华人民共和国商务

部)

“Mr.Zong”Mr.ZongYanmin(宗艳民),oneofourControling

Shareholders,ourexecutiveDirector,chairmanofthe

Boardandgeneralmanager

“NDRC”theNationalDevelopmentandReformComisionofthe

PRC(中华人民共和国家发展和改革委员会)

DEFINITIONS

---

“NominationComite”thenominationcomiteoftheBoardofourCompany,

thedetailsofwhicharedescribedin“Corporate

Information”inthisprospectus

“OferPrice”thefinaloferpriceperOferShare(exclusiveofbrokerage

of1.0%,SFCtransactionlevyof0.0027%,HongKong

StockExchangetradingfeof0.00565%andAFRC

transactionlevyof0.00015%)ofnotmorethanHK$42.80

atwhichHongKongOferSharesaretobesubscribedfor

pursuantotheHongKongPublicOferingand

InternationalOferSharesaretobeoferedpursuantothe

InternationalOfering,tobedeterminedinthemaner

furtherdescribedin“StructureoftheGlobalOfering—

PricingandAlocation”inthisprospectus

“OferShares”theHongKongOferSharesandtheInternationalOfer

Shares,beingtheSharesoftheCompany

“OrdinaryShares”or“Shares”ordinarysharesinthesharecapitaloftheCompany

“OveralCordinators”hasthemeaningiventoitintheListingRulesand,unles

thecontextrequiresotherwise,referstotheoveral

cordinatorsnamedin“DirectorsandPartiesInvolvedin

theGlobalOfering”inthisprospectus

“Over-alotmentOption”theoptionexpectedtobegrantedbyourCompanytothe

InternationalUnderwriters,exercisablebytheSponsor-OC

(onbehalfoftheInternationalUnderwriters)pursuanto

theInternationalUnderwritingAgrement,pursuanto

whichourCompanymayberequiredtoalotandisueup

toanagregateof7,161,800aditionalHShares

(representinginagregateaproximately15%oftheOfer

SharesinitialybeingoferedundertheGlobalOfering)at

theOferPriceto,amongotherthings,cover

over-alocationsintheInternationalOfering,ifany,further

detailsofwhicharedescribedinthesectionheaded

“StructureoftheGlobalOfering”inthisprospectus

“PBOC”thePeople’sBankofChina(中国人民银行),thecentral

bankofthePRC

DEFINITIONS

---

“PRCompanyLaw”or

“CompanyLaw”

theCompanyLawofthePRC(《中华人民共和国公司法》),

asamended,modifiedand/orotherwisesuplementedfrom

timetotime

“PRCLegalAdvisor”GrandalLawFirm(Shanghai),thePRClegaladvisorto

ourCompany

“PriceDeterminationDate”thedateonwhichtheOferPriceistobedetermined,

namelyonorbeforeFriday,August15,2025and,inany

event,notlaterthan12:00nononFriday,August15,2025

unlesotherwisedeterminedbetwentheSponsor-OC(for

themselvesandonbehalfoftheUnderwriters)andour

Company

“RemunerationandApraisal

Comite”

theremunerationandapraisalcomiteoftheBoardof

ourCompany,thedetailsofwhicharedescribedin

“CorporateInformation”inthisprospectus

“RMB”or“Renminbi”Renminbi,thelawfulcurencyofthePRC

“SAFE”theStateAdministrationofForeignExchangeofthePRC

(中华人民共和国家外汇管理局)

“SAMR”,orformerlyknownas

“SAIC”

theStateAdministrationforMarketRegulationofthePRC

(中华人民共和国家市场监督管理总局),formerlyknown

asStateAdministrationofIndustryandComerceofthe

PRC(中华人民共和国家工商行政管理总局)

“SecuritiesLaw”theSecuritiesLawofthePeople’sRepublicofChina(中华

人民共和国证券法),asamended,suplementedor

otherwisemodifiedfromtimetotime

“SFC”theSecuritiesandFuturesComisionofHongKong

“SFO”or“SecuritiesandFutures

Ordinance”

theSecuritiesandFuturesOrdinance(Chapter571ofthe

LawsofHongKong),asamended,suplementedor

otherwisemodifiedfromtimetotime

“ShanghaiCehui”ShanghaiCehuiEnterpriseManagementCenter(Limited

Partnership)(上海策辉企业管理中心(有限合伙),a

limitedpartnershipestablishedunderthelawsofthePRC

onJanuary13,2020,oneofthelimitedpartnersof

ShanghaiMaiming

DEFINITIONS

---

“Shanghai-HongKongStock

Conect”

asecuritiestradingandclearinglinksprogramdeveloped

bytheHongKongStockExchange,ShanghaiStock

Exchange,HKSCandChinaSecuritiesDepositoryand

ClearingCorporationLimitedformutualmarketaces

betwenHongKongandShanghai

“ShanghaiJuepeng”ShanghaiJuepengEnterpriseManagementCenter(Limited

Partnership)(上海爵芃企业管理中心(有限合伙),a

limitedpartnershipestablishedunderthelawsofthePRC

onDecember20,2019,oneofthelimitedpartnersof

ShanghaiMaiming

“ShanghaiMaiming”ShanghaiMaimingEnterpriseManagementCenter(Limited

Partnership)(上海麦明企业管理中心(有限合伙),a

limitedpartnershipestablishedunderthelawsofthePRC

onApril17,2019,oneofouremployeshareholding

platformsandoneofourControlingShareholders

“ShanghaiTianyue”ShanghaiTianyueSemiconductorMaterialCo.,Ltd.(上海

天岳半导体材料有限公司),alimitedliabilitycompany

establishedunderthelawsofthePRConJune2,2020,a

wholy-ownedsubsidiaryofourCompany

“ShanghaiYuefu”ShanghaiYuefuTechnology&TradeCo.,Ltd.(上海越服科

贸有限公司),alimitedliabilitycompanyestablishedunder

thelawsofthePRConDecember6,2019,awholy-owned

subsidiaryofourCompany

“ShanghaiYuelianfeng”ShanghaiYuelianfengTechnologyCo.,Ltd.(上海越联峰科

技有限公司),alimitedliabilitycompanyestablishedunder

thelawsofthePRConJuly22,2022,awholy-owned

subsidiaryofourCompany

“ShanghaiZhuao”ShanghaiZhuaoEnterpriseManagementCenter(Limited

Partnership)(上海铸傲企业管理中心(有限合伙),alimited

partnershipestablishedunderthelawsofthePRConMay

5,2019,oneofouremployeshareholdingplatformsand

oneofourControlingShareholders

DEFINITIONS

---

“ShanghaiZhuhuan”ShanghaiZhuhuanTechnologyCo.,Ltd.(上海铸幻科技有

限公司),alimitedliabilitycompanyestablishedunderthe

lawsofthePRConJune16,2025,awholy-owned

subsidiaryofourCompany

“Share(s)”ordinaryshare(s)inthesharecapitalofourCompany,with

anominalvalueofRMB1.00each,comprisingAShares

andHShares

“Shareholder(s)”holder(s)ofourShares

“ShenzhenTianyue”ShenzhenTianyueAdvancedTechnologyLtd.(深圳天岳先

进科技有限公司),alimitedliabilitycompanyestablished

underthelawsofthePRConOctober19,2022,a

wholy-ownedsubsidiaryofourCompany

“Sponsor-OC”thesponsor-overalcordinatorsasnamedin“Directors,

SupervisorsandPartiesInvolvedintheGlobalOfering”in

thisprospectus

“STA”theStateTaxationAdministrationofthePRC(中华人民共

和国家税务总局)

“STARMarket”theShanghaiStockExchangeScienceandTechnology

InovationBoard

“StateCouncil”thePRCStateCouncil(中华人民共和国务院)

“StrategyComite”thestrategycomiteoftheBoardofourCompany,the

detailsofwhicharedescribedin“CorporateInformation”

inthisprospectus

“subsidiary(ies)”hasthemeaningascribedtoitundertheCompanies

Ordinance

“substantialshareholder(s)”hasthemeaningascribedtoitintheListingRules

“Supervisor(s)”member(s)ofSupervisoryComite

“SupervisoryComite”thesupervisorycomiteofourCompany

DEFINITIONS

---

“TakeoversCode”theCodesonTakeoversandMergersandShareBuy-backs

isuedbytheSFC,asamended,suplementedorotherwise

modifiedfromtimetotime

“TianyueNewMaterial”ShandongTianyueNewMaterialTechnologyCo.,Ltd.(山

东天岳新材料技术有限公司),alimitedliabilitycompany

establishedunderthelawsofthePRConNovember15,

2017,awholy-ownedsubsidiaryofourCompany

“TrackRecordPeriod”theperiodcomprisingthethreyearsendedDecember31,

2022,2023,2024andthethremonthsendedMarch31,

“TrialMeasures”theTrialAdministrativeMeasuresofOverseasSecurities

OferingandListingbyDomesticCompanies(《境内企业

境外发行证券和上市管理试行办法》),promulgatedbythe

CSRConFebruary17,2023

“Underwriters”theHongKongUnderwritersandInternational

Underwriters,asnamedintheHongKongUnderwriting

AgrementandInternationalUnderwritingAgrement,

respectively

“UnderwritingAgrements”theHongKongUnderwritingAgrementandthe

InternationalUnderwritingAgrement

“UnitedStates”,“U.S.”or“US”theUnitedStatesofAmerica,itsteritories,itsposesions

andalareasubjectoitsjurisdiction

“U.S.ExportControlandSanctions

Counsel”

King&WodMalesons

“U.S.SecuritiesAct”UnitedStatesSecuritiesActof1933,asamended,andthe

rulesandregulationspromulgatedthereunder

“US$”,“USD”or“U.S.dolars”UnitedStatesdolars,thelawfulcurencyforthetime

beingoftheUnitedStates

“VAT”value-adedtax

DEFINITIONS

---

“WhiteFormeIPO”theaplicationforHongKongOferSharestobeisuedin

theaplicant’sowname,submitedonlinethroughthe

designatedwebsiteoftheWhiteFormeIPOService

Provideratw.eipo.com.hk

“WhiteFormeIPOService

Provider”

ComputershareHongKongInvestorServicesLimited

“%”percent

Inthisprospectus,theterms“asociate”,“closeasociate”,“conectedperson”,“core

conectedperson”,“conectedtransaction”,and“substantialshareholder”shalhavethe

meaningsgiventosuchtermsintheHongKongListingRules,unlesthecontextotherwise

requires.

Certainamountsandpercentagefiguresincludedinthisprospectushavebensubjecto

rounding.Acordingly,figureshownastotalsincertaintablesmaynotbeanarithmetic

agregationofthefiguresprecedingthem.Anydiscrepanciesinanytableorchartbetwenthe

totalshownandthesumoftheamountslistedareduetorounding.

Fortheaseofreference,thenamesofthePRCestablishedcompaniesorentities,lawsor

regulationshavebenincludedinthisprospectusinboththeChineseandEnglishlanguagesand

intheventofanyinconsistency,theChineseversionshalprevail.

DEFINITIONS

---

Thisglosaryoftechnicaltermscontainsexplanationsofcertaintechnicaltermsusedin

thisprospectusinconectionwithourCompanyandourbusines.Suchterminologyand

meaningsmaynotcorespondtostandardindustrymeaningsorusagesofthoseterms.

“AC-DCstage”theprocesofconvertingalternatingcurent(AC)into

directcurent(DC)

“AI”artificialinteligence

“AIdatacenter”ahighlyadvancedcomputinginfrastructurespecificaly

designedtosuporthestorage,procesing,andtrainingof

complexartificialinteligencealgorithmsandmodels

“AIglases”wearabledevicesthatincorporateadvancedcomputer

vision,augmentedrealityandartificialinteligence

technologiestoenhancetheuser’svisualexperience,

providingreal-timeinformation,interactiveoverlaysand

inteligentasistanceforawiderangeofaplications,from

navigationandvisualizationtoacesibilityand

entertainment

“AR”augmentedreality,atechnologythatoverlaysdigital

information,suchasimages,text,or3Dmodels,ontothe

physicalworld,enhancingtheuser’sperceptionand

experience

“bandgap”thenergydiferenceinsemiconductorsbetwenthetopof

thevalencebandandthebotomoftheconductionband.

Widebandgapsemiconductorspermitdevicestoperateat

muchighervoltagesthanconventionalsemiconductors

“basalplanedislocation”or“BPD”atypeofcrystaldefectinSiCandothersemiconductor

materials,whereaslipordisruptionocursalongthebasal

planeofthecrystalstructure,creatingalocalizedregionof

structuralimperfection

“boule”asingle-crystalingotproducedthroughagrowthproces

whichalowstheslicedsubstratesinepitaxialgrowth

GLOSARYOFTECHNICALTERMS

---

“breakdownelectricfieldstrength”themaximumelectricfieldintensitythatamaterialor

mediumcanwithstandbeforexperiencingelectrical

breakdown(i.e.resultinginthematerialbecoming

conductiveandalowingtheflowofelectricurent)

“chemicalmechanicalpolishing”or

“CMP”

anadvancedsemiconductormanufacturingprocesthat

combineschemicalreactionsandmechanicalabrasionto

planarizeandsmoththesurfaceofwafers

“converters”electricaldevicesthatransformoneformofelectrical

energyintoanother,suchasconvertingalternatingcurent

powertodirectcurentpowerorviceversa

“crystalgrowth”theprocesoformingcrystalinestructureswith

wel-defined,periodicatomicarangements

“crystalnucleation”theinitialstageofcrystalgrowthwhereatomsormolecules

precipitateoutfromthegrowthmedium,reachacritical

size,andthencontinuetogrowintoastablecrystaline

structure.Thisinitialstageiscrucialforthesubsequent

growthofhigh-qualitycrystalsusedinvariouselectronic

andphotonicdevices

“DC/DCconverters”anelectronicircuithatconvertsasourceofdirectcurent

fromonevoltageleveltoanother

“design-in”theprocesofincorporatingaspecificomponentor

technologyintoaproductdesignearlyinitsdevelopment

phase,ensuringcompatibilityandintegration

“design-win”confirmationfromcustomersadoptingasuplier’sproduct

design,indicatingthesuplier’sabilitytomethe

customer’sproduction,delivery,andcostrequirements

“dislocations”linearcrystalographicdefectswithinthesemiconductor

material,whichcansignificantlyimpacthelectricaland

opticalpropertiesofsemiconductordevices

“doping”theintentionalintroductionofimpuritiesintothe

semiconductormaterialtomodifyitselectricalproperties

GLOSARYOFTECHNICALTERMS

---

“electronsaturationvelocity”themaximumvelocitythatelectronscanatainwithina

semiconductormaterialunderhighelectricfieldconditions

“Epitaxialwafer”awaferformedbydepositingasingle-crystalthinfilmona

semiconductorsubstratethroughepitaxialgrowth

technology,whichisusedfordevicemanufacturing

“ES”energystoragesystem,whichreferstoatechnologythat

storesenergyforlateruse,oftenemployedinrenewable

energysystemsandelectricvehicles

“eVTOL”electricverticaltake-ofandlanding,atypeofaircrafthat

cantakeofandlandverticaly,likeahelicopter,whilealso

beingcapableofwing-borneflight,likeanairplane

“fast-charging”achargingmethodforelectricvehiclesthatprovidesa

higherpoweroutputcomparedtostandardcharging,

enablingquickerbateryreplenishment

“FRD”fast-recoverydiodes,whichreferstoatypeofdiodethat

canswitchonandofquickly,makingitsuitableforusein

high-frequencypowerconversioncircuits

“frequency”therateatwhichapowerelectronicdevice,suchasa

switchorectifier,operates.Itisacrucialfactor

influencingtheperformanceandeficiencyofpower

systems

“FOV”fieldofview,theangularextentofagivenscenethatis

visibletotheobserverorimagingdevice

“Ga2O3”galiumoxide,awidebandgapsemiconductormaterialwith

expectedaplicationsinhigh-voltagepowerdevices,dep

ultravioletoptoelectronicdevicesandhigh-frequency

devices

“GaN”galiumnitride

“GW”gigawat,aunitofpowerequaltonebilionwats,

comonlyusedtomeasurethecapacityoflarge-scale

powergenerationsystems

GLOSARYOFTECHNICALTERMS

---

“HEMT”highelectronmobilitytransistorusedinhigh-frequencyand

high-poweraplicationscharacterizedbyhighelectron

mobility

“IATF16949”internationaltechnicalspecificationofautomotiveindustry

qualitymanagementsystem,whichpreparedby

InternationalAutomotiveTaskForce(IATF)andISO

“inch”thestandardunitofmeasurementusedtodenotethe

diameterofsubstrates.Inthesemiconductorindustry,the

comonsizesforsubstratesinclude2-inch(50m),3-inch

(75m),4-inch(100m),6-inch(150m),8-inch

(200m)and12-inch(300m)

“IGBT”insulatedgatebipolartransistors

“inverter”apowerelectronicdevicethatconvertsdirectcurent

electricityintoalternatingcurentelectricity

“kW”kilowat,aunitofpowerequaltonethousandwats,

comonlyusedtomeasurethepoweroutputofvarious

electricaldevicesandsystems

“LED”light-emitingdiode,asemiconductordevicethatemits

lightwhenanelectricurentisaplied,widelyusedin

variouslightingandisplayaplications

“low-junction-capacitance”acharacteristicofcertainsemiconductordevices,suchas

diodes,wherethecapacitancebetwenthep-njunctionis

minimized,enablingfasterswitchingandhigher-frequency

operation

“micropipes”crystalinedefectsthatformtinytubularvoidswithin

materialslikeSiCandgaliumnitride,whichcandegrade

deviceperformanceandreliability

“MIC”monolithicmicrowaveintegratedcircuit,atypeof

integratedcircuitdesignedtoperateatmicrowave

frequencies

GLOSARYOFTECHNICALTERMS

---

“modules”packagedcomponentsthatincludeintegratedcircuitsor

otherelectronicomponents,whichareusedtobuildlarger

systemsordevices.Theyaresentialforenhancing

performance,eficiency,andscalabilityinelectronic

products

“MOSFET”metaloxidesemiconductorfieldefectransistor,usedfor

amplifyingorswitchingelectronicsignals

“N-typeSiCsubstrates”SiCmaterialsdopedwithelementsuchasnitrogento

createanexcesofrelectrons,whichcanenhancetheir

conductivityandmakingthemsuitableforhigh-power

electronicdevices

“on-boardcharger”or“OBC”apowerelectronicsdeviceforelectricvehiclebaterieson

electricvehicles,whichconvertsalternatingcurentpower

fromexternalsources,suchasresidentialoutlets,into

directcurentpowertochargethevehicle’sbaterypack

“on-resistance”thelectricalresistanceofasemiconductordevicewhenit

isinits“onorconductingstate”,whichisacrucial

parameterinpowerelectronicsasloweron-resistanceleads

toreducedpowerlosandimprovedenergyeficiencyin

thedevice’soperation

“photovoltaicsystems”renewablenergytechnologiesthatconvertsunlight

directlyintoelectricalpowerthroughthephotovoltaic

efect,enablingawiderangeofaplicationsfromsmal

electronicdevicestolarge-scalesolarpowerplantsaspart

ofsustainablenergysolutions

“physicalvaportransport”or

“PVT”

acrystalgrowthtechniquewhereamaterialisvaporizedin

avacumorlow-presurenvironmentandthencondenses

ontoacolersurfacetoformasinglecrystalorthinfilm

deposition

“polytypeinclusions”regionswithinasemiconductorcrystal(typicalySiC)

wheretheatomicstackingsequencedeviatesfromthe

expectedandesiredcrystalinestructure

“powerdensity”theamountofpowerprocesedperunitvolumeorunitarea

GLOSARYOFTECHNICALTERMS

---

“powerfactorcorection”or“PFC”procesofimprovingthepowerfactorofanelectrical

systembyreducingthereactivepowercomponentand

bringingthesystemclosertounitypowerfactor,thereby

optimizingenergyeficiencyandreducingcosts

“powersemiconductor”atypeofsemiconductordevicethatisusedasaswitchor

rectifierinpowerelectronics,andservesasthecore

componentofpowersuplies

“powersuplyunits”or“PSUs”devicesthatconvertalternatingcurentfromthepowergrid

intothedirectcurentnededtopowervariouselectronic

componentsandsystems,whilealsoprovidingvoltage

regulation,filtering,andoverloadprotection

“productioncapacity”productioncapacityforayeariscalculatedbymultiplying

thefolowingfactors:(i)theaveragenumberofcrystal

growthfurnacesavailableforproductioninamonth;(i)

thenumberofurnacerunscompletedpermonth;(i)the

averagenumberofingotsproducedperfurnacerun;(iv)the

numberof6-inchSiCsubstratesthatcanbeslicedfrom

eachingot;and(v)12months

“productionutilizationrate”utilizationrateduringayeariscalculatedbydividingthe

actualproductioninayearbytheproductioncapacityin

thesameyear

“PTCheater”positivetemperaturecoeficientheaters,aself-regulating

electricheatingdevicemadefromPTCmaterials.Its

resistanceincreaseswithrisingtemperaturetolimitpower,

whichofersbotheficientheatingandoverheatprotection

functionalities

“P-typeSiCsubstrates”SiCmaterialdopedwithelementsuchasaluminum,which

cangenerateanexcesofholesandenhancethelectrical

conductivity,makingitsuitableforhigh-powerelectronic

devices

“radialtemperaturegradient”thevariationintemperatureobservedintheradialor

perpendiculardirectionwithinacylindricalorspherical

objectorsystem

GLOSARYOFTECHNICALTERMS

---

“radiofrequencydevices”electronicomponentsandsystemsthatgenerate,transmit,

receive,orproceselectromagneticsignalsintheradio

frequencyspectrum

“refractiveindex”adimensionlesnumberthatdescribeshowthespedof

lightorotherelectromagneticradiationisreducedwhen

pasingthroughaparticularmediumormaterial

“resistancetoradiation”theabilityofsemiconductordevicestowithstandand

functioninhighradiationenvironments

“resistivity”ameasureoftheopositiontotheflowofelectricurent

withinamaterial

“reverserecoveryloses”thenergydisipateduringthetransitionperiodwhena

semiconductordevice,suchasadiodeortransistor,

switchesfromitsconducting(forward)statetoits

non-conducting(reverse)state

“RF”radiofrequency,whichisusedtodescribelectromagnetic

wavesinthefrequencyrangesuitableforadio

comunicationandsignalprocesing

“SBD”Schotkybarierdiodes,atypeofdiodewitha

metal-semiconductorjunctionthatalowsforfastswitching

andlowforwardvoltagedrop

“SRG”surfacereliefgratingdifractionopticalwaveguide

technology,anopticalwaveguidesolutionthatinvolvesthe

creationofmicron-ornano-scaleperiodicstructuresonthe

surfaceofamaterial,whichformsanopticaldevice

“SiC”siliconcarbide

“sq.m”squaremeter(s)

“substrates”thebaselayerofmaterialusedinthemanufacturing

procesofsemiconductordevicesandintegratedcircuits.It

istypicalyathinsliceofsingle-crystalsilicon,galium

arsenideorothersemiconductormaterials.Variouscircuit

componentsarefabricatedonthesubstrate

GLOSARYOFTECHNICALTERMS

---

“switchingfrequency”therateatwhichaswitch-modepowersuplyturnsonand

of.Itinfluencestheperformanceofthedevice,including

itseficiencyandpoweroutput,andplaysacrucialrolein

thedesignofcompactandlow-costcircuits

“TF-SAWfilters”thinfilmsurfaceacousticwavefilter,atypeofbandpas

filterthatutilizethepropagationofsurfaceacousticwaves

inthin-filmaterialstoselectivelyfilterandproces

high-frequencyelectricalsignals

“thermalconductivity”themeasureofamaterial’sabilitytoconductheat,orthe

rateatwhicheatistransferedthroughamaterialperunit

areandtemperaturegradient

“thermalexpansion”thetendencyofmaterialstochangeinsize,shape,or

volumeasaresultofchangesintemperature

“thermalfield”thespatialdistributionoftemperaturewithinasystemor

material

“threadingedgedislocation”or

“TED”

atypeofcrystaldefectwherealinedefectisformedby

laticedistortion,withthedislocationlineoriented

perpendiculartothegrowthdirectionandcreatinga

discontinuityintheatomicarangement

“threadingscrewdislocation”or

“TSD”

atypeofcrystaldefectcharacterizedbyaspiral,or

screw-like,distortionofthesemiconductorcrystalatice

thatextendsthroughthematerial,oftenoriginatingfrom

thegrowthsurfaceandpropagatingthroughthebulk

“Ultra-fastcharger”achargingsystemforelectricvehiclesthatcanreplenisha

significantamountofbaterycapacityinashortimeframe,

oftenwithin10-30minutes

“wafer”athinsliceofsemiconductormaterial,usedinthe

manufactureofICsandothermicroelectronicdevices

GLOSARYOFTECHNICALTERMS

---

“widebandgap”thelargenergydiferencebetwenthevalenceand

conductionbandsofcertainsemiconductormaterials,which

enablesuniquelectricalandthermalproperties

advantageousforadvancedelectronicandoptoelectronic

aplications

“xEV”varioustypesofelectricvehicles

“Zero-DefectPlan”aninternalmanagementplanthataimsforinspection-fre

deliveryofhigh-qualityproductstocustomers

“4Hcrystal”aspecificrystalstructurecharacterizedbyahexagonal

unitcelwithastackingsequenceofABCB,wheretheunit

celrepeatseveryfouratomiclayers

“5G”thefifth-generationwirelestechnologystandardthataims

toprovidesignificantlyfasterdataspeds,lowerlatency,

andgreaterconectivitycomparedtopreviousgenerations

ofmobilenetworks

GLOSARYOFTECHNICALTERMS

---

Wehaveincludedinthisprospectusforward-lokingstatements.Statementsthatarenot

historicalfacts,includingstatementsaboutourintentions,beliefs,expectationsorpredictions

forthefuture,areforward-lokingstatements.

Thisprospectusincludesforward-lokingstatements.Alstatementsotherthanstatementsof

historicalfactscontainedinthisprospectus,including,withoutlimitation,thoseregardingour

futurefinancialposition,ourstrategy,plans,objectives,goals,targetsandfuturedevelopmentsin

themarketswhereweparticipateoraresekingtoparticipate,andanystatementsprecededby,

folowedbyorthatincludethewords“believe,”“expect,”“estimate,”“predict,”“aim,”“intend,”

“wil,”“may,”“plan,”“consider,”“anticipate,”“sek,”“should,”“could,”“would,”“continue,”or

similarexpresionsorthenegativethereof,areforward-lokingstatements.Theseforward-loking

statementsinvolveknownandunknownrisks,uncertaintiesandotherfactors,someofwhichare

beyondourcontrol,whichmaycauseouractualresults,performanceorachievements,orindustry

results,tobematerialydiferentfromanyfutureresults,performanceorachievementsexpresed

orimpliedbytheforward-lokingstatements.Theseforward-lokingstatementsarebasedon

numerousasumptionsregardingourpresentandfuturebusinestrategiesandthenvironmentin

whichwewiloperateinthefuture.Importantfactorsthatcouldcauseouractualperformanceor

achievementstodifermaterialyfromthoseintheforward-lokingstatementsinclude,among

otherthings,thefolowing:

(cid:129)ourabilitytosucesfulyimplementourbusinesplansandstrategies;

(cid:129)futuredevelopments,trendsandconditionsintheindustryandmarketsinwhichwe

operateorintowhichweintendtoexpand;

(cid:129)generalpoliticalandeconomiconditionsofjurisdictionsinwhichweoperate;

(cid:129)ourbusinesoperationsandprospects;

(cid:129)ourcapitalexpenditureplans;

(cid:129)weather,naturaldisastersandclimatechange;

(cid:129)theactionsandevelopmentsofourcompetitors;

(cid:129)ourfinancialconditionandperformance;

(cid:129)capitalmarketdevelopments;

FORWARD-LOKINGSTATEMENTS

---

(cid:129)ourdividendpolicy;

(cid:129)anychangesinthelaws,rulesandregulationsofthecentralandlocalgovernmentsin

thePRCandotherelevantjurisdictionsandtherules,regulationsandpoliciesofthe

relevantgovernmentalauthoritiesrelatingtoalaspectsofourbusinesandbusines

plans;and

(cid:129)variousbusinesoportunitiesthatwemaypursue.

FORWARD-LOKINGSTATEMENTS

---

Youshouldcarefulyconsideraloftheinformationinthisprospectus,includingtherisks

anduncertaintiesdescribedbelow,beforemakinganinvestmentinourHShares.Thefolowing

isadescriptionofwhatweconsidertobeourmaterialrisks.Anyofthefolowingriskscould

haveamaterialadversefectonourbusines,financialconditionandresultsofoperations.In

anysuchcase,themarketpriceofourHSharescouldecline,andyoumaylosealorpartof

yourinvestment.

Thesefactorsarecontingenciesthatmayormaynotocur,andwearenotinapositionto

expresaviewonthelikelihodofanysuchcontingencyocuring.Theinformationgivenisas

oftheLatestPracticableDateunlesotherwisestated,wilnotbeupdatedafterthedatehereof

andisubjectothecautionarystatementsinthesectionheaded“Forward-Loking

Statements”inthisprospectus.

RISKSRELATINGTOURINDUSTRYANDBUSINES

Ourhistoricalresultsmaynotbeindicativeofourfutureperformance,andwemaynotbe

sucesfulinexpandingouroperationsormanagingourgrowth.

DuringtheTrackRecordPeriod,wexperiencedarapidrevenuegrowthandgenerated

revenueofRMB417.0milion,RMB1,250.7milion,RMB1,768.1milion,RMB426.1milionand

RMB408.0milionin2022,2023,2024andthethremonthsendedMarch31,2024and2025,

respectively.However,therecanbenoasurancethatwewilbeabletomaintainourhistorical

growthratesinfutureperiods.Wemayencounterisksandificultiesfrequentlyexperiencedby

rapidlygrowingcompaniesinconstantlyevolvingindustries,suchas(i)maintainingproduct

qualityandreliabilitywhilescalinguproduction;(i)managingourgrowingoperations

efectivelywhilepreservingourcorporateculture;(i)balancingproductioncapacitywithmarket

demandtoavoidover-orunder-utilization;(iv)intensecapitalcomitmentinupgrading

manufacturingfacilityandequipment;(v)atractingandretainingexperiencedemployesina

competitivejobmarket;and(vi)navigatingcomplexandevolvingregulationsacrosdiferent

marketsandjurisdictions.Anypredictionsaboutourfuturerevenueandexpensesmaynotbeas

acurateastheywouldbeifwehadalongeroperatinghistoryoroperatedinamorepredictable

industry.Ourbusines,resultsofoperationsandfinancialconditiondependinpartonourability

toefectivelymanageourgrowthorimplementourgrowthstrategies.Weintendtogrowby

expandingourbusines,increasingmarketpenetrationofourexistingproductsandevelopingnew

ones.Themanagementofourgrowthmayplacesignificantdemandsonourmanagerial,

administrative,operational,financialandotheresources.Moreover,ourgrowthdependsonthe

abilitytomaintainstableproductioncapacityandofereliableproductstourcustomers.Our

efortstogrowourbusinesmaybemorecostlythanwexpect,andwemaynotbeableto

increaseourevenuenoughtofsetourincreasedoperatingexpenses.Wemayincursignificant

RISKFACTORS

---

losesinthefutureforanumberofreasons,includingtheotherisksdescribedherein,and

unforesenexpenses,dificulties,complicationsandelays,andotherunknownevents.Ifweare

unabletoachieveandsustainprofitability,ourbusinesmaybeharmed.Ifwefailtoachievethe

necesarylevelofeficiencyaswegrow,ourgrowthratemaydecline,investors’perceptionsof

ourbusinesandprospectsmaybeadverselyafectedandthemarketpriceofourHsharescould

decline.

Ourperformanceisubjectodemandsfromourdownstreamindustriesthatadoptour

productsandfluctuationsinrawmaterialsuplies.Slowdowninthegrowthofthese

downstreamindustriescouldadverselyafectourbusines,financialconditionandresultsof

operations.

Ourperformanceisubjectothefluctuationsofdemandsfromdownstreamindustries.

DuringtheTrackRecordPeriod,ourSiCmaterialswereprimarilysoldtopowersemiconductor

manufacturers,whichoferedtheirproductstodownstreamcustomersacrosvariousindustries,

includingelectricvehicles,AIdatacenters,photovoltaicsystems,railtransportation,powergrids,

householdapliances,advancedtelecomunicationbasestationsandAIglases.Demandforour

productslargelydependsongrowthandcompetitionwithinthemarketsforthendproducts,

whichareimpactedbyfactorsbeyondourcontrol.Ifthendproductmarketscanotmaintain

robustgrowthorarembroiledinfiercecompetitions,oursuplyofSiCsubstratesandour

businesandprofitabilitymaybeadverselyafected.Forinstance,inearly2025,electricvehicle

manufacturersinChinawerengagedinapricewar,whichnotonlydepresedprofitsforthe

brandsbutalsoexertedpresureontheupstreamsupliers,includingSiCsubstratesmanufacturers.

Thefactorsthatmayimpacthegrowthwithinendproductmarketsinclude,amongothers:

(cid:129)adeclineindemandfor,ornegativeperceptionof,orpublicityabout,productsof

downstreamindustries;

(cid:129)adownturningeneraleconomiconditionsinthePRCandworldwide,resultingin

reducedemandforourproducts,excesinventoryandpresureonpricing;

(cid:129)regulatoryrestrictions,tradedisputes,industry-specificquotas,tarifs,non-tarifbariers

andtaxesthatmayhavethefectoflimitingexportsfromthePRC;

(cid:129)theinabilityofourcustomerstodedicatenecesaryresourcestopromoteand

comercializetheirproducts;

(cid:129)theinabilityofourcustomerstoadaptothecyclicalfluctuationsoftheglobal

semiconductormarket,primarilydrivenbytechnologyupgrades,capacityinvestments

andinventorychanges,resultingintheirproductsbecomingobsolete;

RISKFACTORS

---

(cid:129)thefailureofourcustomers’endproductsinwhichourproductsareusedtomet

evolvingindustryrequirementsorachievemarketaceptance;

(cid:129)delaysandprojectcancelationsasaresultofdesignflawsintheproductsdevelopedby

ourcustomers;

(cid:129)increasedcostsasociatedwithpotentialdisruptionstourcustomers’suplychainand

othermanufacturingandproductionoperations;

(cid:129)thedeteriorationofourcustomers’financialcondition;and

(cid:129)thefectsofcatastrophicandotherdisruptiveventsatourcustomers’oficesor

facilities,includingnaturaldisasters,telecomunicationsfailures,cyber-atacks,

teroristatacks,pandemics,epidemicsorotheroutbreaksofinfectiousdisease,breaches

ofsecurityorlosofcriticaldata.

Intheventhatanyoftheaboveventsocur,thendproductmarketsmaynotmaintain

robustgrowthandthedemandforourproductsmaybereduced.Therefore,ourbusines,financial

condition,resultsofoperationsandprospectscouldbematerialyandadverselyafected.

Ifwefailtodevelopnewproductsthatadrescustomerpreferencesandachievemarket

aceptanceinatimelyandcost-efectivemaner,ouresultsofoperationscouldbeadversely

afected.

OurfuturesucesdependsonthesucesfulexpansionofourSiCsubstrateproductportfolio

andcustomerbase.Ourcustomersareconstantlysekingnewproductswithlargerdiametersand

beterperformance,andoursucesreliesheavilyonourabilitytocontinuetodevelopand

provideourcustomerswithnewproductsandimprovementsofexistingproducts.Inordertogain

marketshareandkepupwiththetechnologicaladvancementsinthesemiconductorindustry,we

mustconstantlyintroducenewproductsandrespondtonewandevolvingcustomerdemands.

Thesucesofanewproductdependsonavarietyofspecificimplementationfactors,

including:

(cid:129)timelydevelopmentofnewtechnologiesandadaptiontochangesinexisting

technologies;

(cid:129)timelyandcost-efectiveprocesingandmasproductiontoacomodatenewproduct

designs,whilensuringfunctionality,performanceandreliability;

RISKFACTORS

---

(cid:129)efectivemarketing,salesandservicestogainmarketshare;and

(cid:129)strongandsustainablemarketdemand.

Productdesign,development,inovationanditerationisoftenacomplex,time-consuming

andcostlyprocesinvolvingsignificantinvestmentinR&Dwithnoasuranceofreturnon

investment.In2022,2023,2024andthethremonthsendedMarch31,2024and2025,we

incuredR&DexpensesofRMB127.6milion,RMB137.2milion,RMB141.8milion,RMB22.3

milionandRMB44.9milion,respectively.However,thesemiconductorindustryishighly

competitive,characterizedbyrapidlychangingtechnologiesandtechnologicalobsolescence.We

mayinvestsignificantresourcesinR&DactivitiesandincursignificantR&Dexpensesinthe

futuretoachievetechnologicalbreakthroughs,aswelasmaintainourtechnologicaleadershipand

thecompetitivenesofourproductsandsolutions.Therecanbenoasurancethatwewilbeable

todevelopandintroducenewandenhancedproductsinatimelyoreficientmanerorthatwe

wilcontinuetoachievetechnologicalbreakthroughsandsucesfulycomercializesuch

breakthroughsthroughourR&Dactivities.Failuretotimelydevelopnewtechnologiesortoreact

quicklytochangesinexistingtechnologiescouldmaterialydelayourdevelopmentofnewand

enhancedproducts,whichcouldresultinproductobsolescence,decreasedrevenue,and/oralosof

marketsharetocompetitors.OurinvestmentsinR&Dactivitiesmaynotgeneratesuficient

revenuetofsetliabilitiesasumedandexpensesasociatedwiththeseinvestments.

Inadition,wemaynotbeabletoptimizeourproductionprocesesandtheabilitytomas

produceinacost-efectivemaner.Wemayalsoencounterlowermanufacturingyieldsandlonger

deliveryschedulesincomencingmasproductionofnewproductsthatweintroduce,which

couldincreaseourcostsandisruptoursuplyofsuchproducts.Further,ifinitialsalesvolumes

forneworenhancedproductsdonotreachanticipatedlevelswithinthetimeperiodswexpect,

wemayberequiredtoengageinaditionalmarketingefortstopromotesuchproductsandthe

costsofdevelopingandcomercializingsuchproductsmaybehigherthanwepredict.Tothe

extenthatwefailtotimelydevelopnewproductsortoquicklyachievemarketaceptanceina

cost-efectivemaner,ouresultsofoperationscouldbematerialyandadverselyafected.

Thesemiconductormaterialindustryishighlycompetitive.Ifwearenotabletocompete

sucesfuly,ourbusines,resultsofoperationsandfutureprospectswilbeharmed.

Thesemiconductorindustryischaracterizedbyrapidlychangingtechnologiesaswelas

technologicalobsolescence.Significantechnologicaladvancementsinalternativesemiconductor

materialscouldrenderourexistingorfutureproductsuncompetitive,obsoleteorotherwise

unmarketable,andmaymaterialyandadverselyafectourbusinesandprospectsinwayswe

canotcurentlyanticipate.Competitionamongprovidersofdiferentsemiconductorproductsmay

increasesubstantialyinthefuture.IfourSiCsubstratesfailtosecuresuficientmarketsharein

RISKFACTORS

---

thecompetitioninthecourseofcomercialization,orifthecomercializationdoesnotmetour

orthemarket’sexpectations,wemaynotbeabletorecoverourcosts,andourbusines,resultsof

operationsandfutureprospectswilbeharmed.

Inadition,thesemiconductorindustryismarkedbyintensecompetitionandahighlevelof

concentration.AcordingtoFrost&Sulivan,thetopfiveSiCsubstratemanufacturersintermsof

revenuefromSiCsubstratesalesin2024hadacombinedmarketshareof68.0%.Theintroduction

ofnewproductsandtechnologiesbyourcompetitors,themarketaceptanceofproductsbasedon

ourneworalternativetechnologies,orourfailuretoanticipateortimelydevelopneworenhanced

productsortechnologiesinresponsetochangingmarketdemand,whetherduetotechnological

shiftsorotherwise,couldresultinlosofcustomersandreducedcompetitivenes.Moreover,some

ofourdirectandindirectcompetitorsmayhavegreateresourcesandcertainadvantages,including

butnotlimitedtolongeroperatinghistory,beterfinancingcapabilities,wel-developed

technologiesandintelectualproperties,moreficientsalesandmarketingandstrongercustomer

relations.Ifweareunabletostaycompetitiveorcompetesucesfulywithourcompetitors,we

mayexperiencedecreasesinmarketshareandsalesvolume,andmayhavetoreduceourpricesor

makeotherconcesions,therebyadverselyafectingourprofitability,busines,financialcondition

andresultsofoperations.

Ourbusines,financialconditionandresultsofoperationsmaybematerialyandadversely

afectedbyinternationalpolicies,internationalexportcontrolsandeconomicsanctions.

CertainregionsoutsidemainlandChinahaveimposedormayimposetarifs,exportcontrols,

economicsanctionsorothertrade-relatedmeasuresinvariousforms(suchasharshtrade

conditions)againstcertaincountries,individualsandlegalentities,which,fromtimetotime,

prohibitorestrictexportandimportactivitiestoacertainextent.Forinstance,heightened

tensionsbetwenmajoreconomies,suchastheUnitedStatesandChina,couldresultinstricter

tarifs,exportcontrolsandeconomicsanctionslawsoregulationsthatcouldafectourbusines,

exportsorsalesinothercountriesand/orcouldresultinrestrictions,penaltiesorfines.

TherecentU.S.-Chinatradetensionshavealsoledtotheintroductionofhighertarifson

variousgodstradedbetwenthetwocountries.OnDecember23,2024,theOficeoftheU.S.

TradeRepresentative(the“USTR”)anouncedanewinvestigation(the“Section301

Investigation”)toexamineChineseactionsalegedlyrelatedtotargetingofthesemiconductor

industryfordominanceandtheimpactofsuchactionsontheU.S.underSection301oftheTrade

Actof1974(asamended).AlthoughthehearingoftheSection301Investigationwasconvenedon

March11,2025andtheUSTRhasnotyetmadeanyfurtherdecisionsasoftheLatestPracticable

Date,itmaynegativelyimpactoursalestotheU.S.aswelasouroverseascustomers’wilingnes

RISKFACTORS

---

topurchaseourproductsgiventhatheUSTRmayimposeaditionaltarifsonPRC-originSiC

substrates.Inadition,betwenFebruaryandApril2025,PresidentTrumpimposedmultipletarifs

onseveralmajortradingpartnersoftheU.S.,includingCanada,China,theEuropeanUnionand

Mexico.

Afterseveralroundsofadjustments,the10.0%reciprocaltarifongodsimportedfrom

Chinaremainedbutheaditional24.0%tarifhadbentemporarilysuspendedonMay14,2025

for90days.OnMay28,2025,theUnitedStatesCourtofInternationalTradeheldthathe

InternationalEmergencyEconomicPowersAct(“IEPA”)doesnotauthorizeanyofthe

worldwide,retaliatoryortrafickingtariforders,vacatingthosethatwerechalenged.Folowing

theTrumpadministration’simediateapeal,theU.S.CourtofApealsfortheFederalCircuit

(the“CAFC”)grantedtheTrumpadministration’srequestforanadministrativestayonJune10,

2025andwilholdanoralargumentonJuly31,2025.Asuch,theIEPAtarifsremainedin

efectasofthedateofthisprospectus.

AsoftheLatestPracticableDate,theU.S.hadimposed80.0%tarifsinagregateon

semiconductorproductsfromChina,includinga50.0%Section301tarif,a20.0%

Fentanyl-relatedtarifundertheIEPAanda10.0%reciprocaltarif.Asuch,therearesignificant

uncertaintieswithrespectohowthepoliticaltensions,tradepoliciesandmarketdynamics

betwentheU.S.andChinawilevolve.Althoughwederivedlesthan0.1%ofourevenuefrom

oursalestotheU.S.duringtheTrackRecordPeriod,thevolatilityanduncertaintyoftheTrump

administration’starifpoliciesmakeitdificultforustopredicthemagnitudeandimpactofany

futurechangesintherelationshipsbetwentheU.S.andothercountriesornewlawsoregulations

adoptedbytheU.S.andothercountriesonourbusinesduetotheuncertaintiesmentionedabove.

Meanwhile,theU.S.hastighteneditsexportcontrolmeasureswithrespecto

semiconductor-relateditems,suchashigh-technologygods,semiconductorsandelectronics,to

Chinasince2020.Inadition,Section734.9oftheExportAdministrationRegulations(the

“EAR”)administeredbytheBureauofIndustryandSecurityundertheU.S.Departmentof

Comerce,knownasthe“Foreign-DirectProduct(FDP)Rules”,furtherexpandsthescopeof

itemsubjectotheEARtorestrictcertainend-users’abilitytobtainon-U.S.-originitemsthat

mightbeusedforthedevelopmentofindustriesbeingconcernedbytheU.S.Thereisaposibility

thathetraderestrictionscouldexpandiftheU.S.andChinadonotreachanagrementoresolve

theisues.ThereisnoasuranceastohowtheU.S.-Chinatradetensionsmightdeveloporwhether

therewilbeanychangestothescopeandextentofgodsthatareorwilbesubjectosuch

exportcontrols,sanctions,tarifs,ornewtradepoliciesintroducedbythetwocountries.Wecanot

predictheimplicationsoftheongoingU.S.-Chinatradetensionsandtheresultingimpactonour

industryandtheglobaleconomy.

RISKFACTORS

---

Inadition,onAugust9,2023,theBidenAdministrationisuedtheExecutiveOrderon

AdresingUnitedStatesInvestmentsinCertainNationalSecurityTechnologiesandProductsin

CountriesofConcern(the“ReverseCFIUSEO”),grantingtheU.S.governmentheauthorityto

establishandenforceanoutboundinvestmentscreningregime(the“OutboundInvestment

Program”).OnOctober28,2024,theDepartmentoftheTreasuryisuedtheProvisionsPertaining

toU.S.InvestmentsinCertainNationalSecurityTechnologiesandProductsinCountriesof

Concern(the“FinalRule”)toimplementheReverseCFIUSEO.TheFinalRulebecamefective

onJanuary2,2025.FolowingthecompletionoftheGlobalOfering,itisexpectedthatU.S.

personswilbeabletoinvestinourHSharesbasedonthepubliclytradedsecuritiesexception

undertheFinalRule.However,theFinalRulemayincreasethecomplianceburdenofU.S.

investorsandmaycausecertainU.S.investorstoadoptamorecautiousaproachintheir

investments,afectingtheinvestorsentimentowardsus,andthereforenegativelyimpactingour

abilitytoraisecapital.

CurentlytheprimaryEUtradepoliciesdirectedatChinacompriseanti-dumpingand

countervailingdutiesaswelasunilateralprotectivemeasures.AsoftheLatestPracticableDate,

theEUhadnot(i)imposedanyanti-dumpingorcountervailingdutiesonSiCsubstratesimported

fromChina;(i)initiatedanyinvestigationsconcerningSiCsubstrates;or(i)apliedany

unilateralprotectivemeasuresagainstourSiCsubstrates.However,folowingaseniorEU

oficial’scriticismofChinatheG7sumitinJune2025,thetraderelationshipbetwenChina

andtheEUmightdeterioratedasSino-EUgeopoliticaltensionheightened.Giventhatherevenue

thatwederivedfromtheEUcontinuouslyincreaseduringtheTrackRecordPeriod,suchadverse

developmentmightleadtotheimpositionofaditionaltarifs,exportrestrictions,sanctionsor

regulatorychangesthatcouldlimitourbusinesgrowthandisruptouroperationinEurope,

underminingourabilitytoserveourEuropeancustomersefectively.Insuchcase,ourbusines

operation,financialperformanceandfutureprospectsmightbematerialyandadverselyafected.

DuringtheTrackRecordPeriod,ourproductswereoferedtocustomersinmainlandChina

andoverseasmarkets.Thereisnoasurancethatoursalesorourcustomers’salesoftheir

semiconductorproductswilnotbesubjectotherestrictionsintroducedbytheU.S.Furthermore,

ifweselourproductstothercountriesand/orenduserswhicharesubjectosanctionsorexport

controlsinthefutureand/orifthescopeofthexportcontrolsorsanctionsisexpanded,our

busines,financialconditionandresultsofoperationsmaybematerialyandadverselyafected.

Further,wehavenocontroloverthecountriestowhichthecustomerswilseland/orexport

theirendproducts.Ifthexportsalesofthecustomers’endproductsarerestricted,prohibitedor

madesubjectoanytradeconditionsunderanyinternationalpoliciesorinternationalexport

controlsoreconomicsanctionsimposedbyanyjurisdictions,customerdemandinourproducts

maydropand,asaresult,ourbusines,financialconditionandresultsofoperationsmaybe

materialyandadverselyafected.

RISKFACTORS

---

Ifweareunabletokepupwithtechnologicaladvancementinthesemiconductorindustry,

wemaynotbeabletoretainexistingcustomers,atractnewcustomersormaintainour

marketposition.

Thesemiconductorindustryischaracterizedbyrapidtechnologicalevolutionandcontinuous

advancements.Asnewmaterialsandinovativeprocesesemerge,thecompetitivelandscapeand

operationalnormshift.Kepingupwithtechnologicalinovationrequiresubstantialinvestment

inR&Dandcontinuousadaptationtoemergingtrends.Inabilitytoefectivelyimplement

cuting-edgetechnologiesoradaptoshiftsinindustrystandardsmayleadtoreduced

competitivenes,losofmarketshare,andfinancialchalenges.Consequently,ourabilityto

maintainandgrowourpositionwithintheindustrywouldbesignificantlycompromised,

potentialyimpactingshareholdervalueandlong-termbusinesustainability.Ifwefailtokepup

withthesetechnologicaldevelopments,ourbusinesoperations,financialperformanceandfuture

prospectsmightbematerialyandadverselyafected.

WemayexperiencedownwardpricetrendofSiCsubstratesinthefuture.

Theglobalsemiconductormarketischaracterizedbycyclicalfluctuations,primarilydriven

bytechnologyupgrades,capacityinvestmentsandinventorychanges.Thesecyclicalvariationscan

leadtoperiodsofsignificantgrowthfolowedbydownturns.Duringperiodsofdownturn,wemay

facepresureonpricingforourSiCsubstrates.AsustainedownwardpricetrendinSiCsubstrates

couldnegativelyafectourevenueandprofitmargins,particularlyifweareunabletofset

lowerpriceswithincreasedsalesvolume,costreductionsorproductmixupgrade,whichmay

adverselyafectourfinancialperformanceandoperationalresults.

Ourbusinesdependsubstantialyonthefortsofourmanagementandhighlyskiled,

includingR&Dpersonel,andouroperationsmaybeseverelydisruptedifwelostheir

service.

Ourfutureperformancedependsontheserviceandcontributionofourmanagemento

overseandexecuteourbusinesplansandidentifyandpursuenewoportunitiesandproduct

inovations.Anylosofserviceofourmanagementcansignificantlydelayorpreventusfrom

achievingourstrategicbusinesobjectives,andadverselyafectourbusines,financialcondition

andresultsofoperations.Fromtimetotime,theremaybechangesinourmanagementeam,

resultingfromthedepartureofpersonel,whichcouldalsodisruptourbusines.Hiringsuitable

replacementsandintegratingthemintourexistingteamsalsorequireasignificantamountof

time,trainingandresources,andmayimpactourexistingcorporateculture.

RISKFACTORS

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Aditionaly,competitionforhighlyskiledpersonelisoftenintense,andwemayincur

significantcoststoatractandretainhighlyskiledpersonelinourR&Dteam.Wemaynotbe

sucesfulinatracting,integrating,oretainingqualifiedpersoneltofulfilourcurentorfuture

neds.Inadition,jobcandidatesandexistingemployesoftenconsiderthevalueofthe

incentivesandawardstheyreceiveinconectionwiththeiremployment.Ifsuchincentivesor

awardsdecline,itmayadverselyafectourabilitytoretainhighlyskiledemployes.Ifwefailto

atractnewpersonelorfailtoretainandmotivateourcurentpersonel,ourbusinesand

prospectscouldbeadverselyafected.

Thexpansionintoverseasmarketsmayexposeustoperational,financialandregulatory

risks.

Aswestartedtoexpandoverseas,in2022,2023,2024andthethremonthsendedMarch31,

2024and2025,ourevenuefromsalesoutsidemainlandChinamountedtoRMB52.4milion,

RMB414.4milion,RMB845.5milion,RMB144.0milionandRMB195.1milion,respectively,

acountingfor12.6%,33.1%,47.8%,33.8%and47.8%ofourtotalrevenue,respectively.

Expandingourglobalfotprintandgrowingoverseasalesisanimportantpartofourfuture

growth,buthesefortsmaynotbesucesful.Ouroverseasoperationsandexpansionplans,such

asourplantosetupanewproductionbaseinSoutheastAsiaresubjectoanumberofrisks,

includingbutnotlimitedto:

(cid:129)foreignexchangecontrolandexchangeratefluctuations;

(cid:129)increasedcostsasociatedwithmaintainingtheabilitytounderstandthelocalmarkets

andevelopandmaintainefectivemarketinginvariouscountries;

(cid:129)dificultiesandcostsrelatedtoprovidingafter-saleservicesandcustomersuportin

thesemarkets;

(cid:129)dificultywithstafingandmanagingoverseasoperations;

(cid:129)failuretodevelopandimplementapropriateriskmanagementandinternalcontrol

structurestailoredtoverseasoperations;

(cid:129)dificultyandcostrelatingtocompliancewithdiferentcomercialandlegal

requirementsoftheoverseasmarketsinwhichweoferorplantoferourproducts;

RISKFACTORS

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(cid:129)failuretobtainormaintainpermitsforourproductsinthesemarkets;

(cid:129)inabilitytobtain,maintainorenforceintelectualpropertyrights;

(cid:129)stringentconsumerprotectionandproductcomplianceregulationsonourcustomers’

products;

(cid:129)unanticipatedchangesinprevailingeconomiconditionsandregulatoryrequirements;

and

(cid:129)tradebariersuchasexportrequirements,tarifs,taxesandotherestrictionsand

expenses.

Theocurenceofanyoftheseriskscouldnegativelyimpactouroverseasexpansionand

consequentlyourbusines,financialconditionandresultsofoperations.

Ourbusinesdependsonourabilitytoprotectourintelectualpropertyrights,andwemay

besubjectointelectualpropertyinfringementandotherclaimsbythirdpartiesinthePRC

orotherjurisdictions,which,ifsucesful,couldcauseustopaysignificantdamagesand

incurothercosts.

Werelyprimarilyonacombinationofourpatents,tradesecrets,trademarks,the

confidentialityagrementsignedbythemployes,andconfidentialityagrementsignedwith

thirdpartiestoprotectourintelectualpropertyrights.Thereisnoasurancethatwewilbeable

tosucesfulyaplyandbegrantednewintelectualpropertyrightsinatimelyandcost-efective

manerinthefuture,asuchaplicationsarexpensiveandtime-consuming.Se“Busines—

IntelectualProperty.”Unauthorizedpartiesmaybeabletobtainanduseinformationthatwe

regardasproprietary.Undersuchcircumstances,toprotectourintelectualpropertyrightsand

maintainourcompetitiveadvantages,wemayinitiatelegalprocedingsagainstpartieswhowe

believeareinfringingourintelectualpropertyrights.Legalprocedingsareoftencostlyandmay

divertmanagementatentionandresourcesawayfromourbusines.Incertainsituations,wemay

havetoinitiatesuchlegalprocedingsinregionsoutsidemainlandChina,inwhichcaseweare

subjectoaditionalrisksastotheresultoftheprocedings,theamountofdamagesthatwecan

recover,andthenforcementproces.

Oursucesisalsosubjectourabilitytouse,developandprotectourtechnologyandtrade

secretswithoutinfringingtheintelectualpropertyrightsofthirdparties.Othersmayholdor

obtainpatents,copyrights,trademarks,orotherproprietaryrightsusedinourproducts.Thismight

prevent,limit,orinterferewithourproduction,use,development,sales,ormarketing,andcould

thereforedisturbourdailyoperationsandistractourmanagement.Companiesholdingpatentsor

RISKFACTORS

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otherintelectualpropertyrightsmay,inthePRCorotherjurisdictions,bringsuitsaleging

infringementofsuchrightsorotherwiseasertheirightsandurgeustobtainlicenses.Wemay

alsobesubjectoliabilityduetothemisconductofouremployesinrelationtothirdparty

intelectualpropertyrights.Ouruseofintelectualpropertiesrelatingtourdesign,software,and

technologycouldbefoundtoinfringeuponexistingintelectualpropertyrightsownedbyothers.

Inadition,ifwearefoundtohaveinfringeduponathirdparty’sintelectualpropertyrights,we

mayberequiredtodoneormoreofthefolowing:

(cid:129)ceasetoselproductsthatareinvolvedinthechalengedintelectualpropertyrights

ownedbyothers;

(cid:129)paydamagestotherightsholdersorthecustomerswhopurchasedourproducts;

(cid:129)redesignourproducts;or

(cid:129)establishandmaintainalternativebrandingforourproducts.

IntelectualpropertyinfringementorotherclaimsbythirdpartiesinthePRCorother

jurisdictions,ifsucesful,mayinvalidateourpatents,subjectustopaydamagestothirdparties,

requireustoseklicensesfromthirdparties,payongoingroyalties,redesignourproducts,and

subjectustoinjunctionsprohibitingthemanufactureandsaleofourproductsortheuseofour

technologies.Anyoftheaforementionedcouldmaterialyandadverselyafectourbusines,

financialconditionandresultsofoperations.

Wemaypursuestrategicinvestments,partnershipsoracquisitions,andourbusinescouldbe

adverselyafectedifwefailtosucesfulyidentify,evaluateandintegratethetarget

busineses.

Wemayfromtimetotimegrowourbusinesthroughstrategicinvestments,partnershipsor

acquisitionsbyourselvesorincolaborationwithexternalparties.However,theprogresdepends

onvariousfactors,suchasmarketconditions,regulatorychangesandresourceavailability.We

maynotbeabletoidentifyapropriatetargets,andevenifweareabletodoso,wemaydecideto

discontinueourinvestment,partnershiporacquisitionbasedonourasesmentoftheproject’s

viabilityandalignmentwithourstrategicobjectives.Thiscouldpotentialyresultinourinvested

capitalnotyieldingtheanticipatedreturns,orclaimsorliabilitiesfromotherpartiesinvolved,

therebyadverselyafectingourfinancialcondition,resultsofoperationsandprospects.

RISKFACTORS

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Wearesubjectorisksrelatingtolitigationsandisputeswithemployes,competitors,

businespartnersorotherparties,whichcouldadverselyafectourbusines,financial

condition,resultsofoperationsandprospects.

Wemaybesubjectodisputesorclaimsofvarioustypesbroughtbyvariousexternalor

internalparties.Forinstance,wemaybesubjectolabordisputesandadversemployerelations,

whichcouldresultinlegalprocedingsandleadtoreputationalharm,monetarydamages,

interuptionsofouroperationsordiversionofmanagerialatention.

Wemayalsobesubjectodisputeswithourcompetitors,supliers,businespartnersor

governmentalentitiesrelatingtocontractualdisputes,intelectualpropertyrightinfringementsor

legalcompliance.Suchclaimsandisputesmayevolveintolitigationsorlawenforcementactions.

Wecanotguarantethatwewilnotbesubjectolegalprocedingsintheordinarycourseof

busines.Legalprocedingsaredistractiveandexpensiveastheymaycauseustoincurdefense

costs,utilizeasignificantportionofouresourcesandivertmanagerialatentionfromour

day-to-dayoperations,anyofwhichcouldharmourbusines.Inthecaseofanadverseverdict,we

mayberequiredtopaysignificantmonetarydamages,asumesignificantliabilitiesorsuspendor

terminatepartsofouroperations.Asaresult,ourbusines,financialcondition,resultsof

operationsandprospectsmaybematerialyandadverselyafected.

Wehaveincuredgroslosin2022andnetlosesin2022and2023andnetoperatingcash

outflowsin2022and2023,andwemaycontinuetoincurlosesandnetoperatingcash

outflowsinthefuture.

Ouresultsofoperationshaveben,andmaycontinuetobe,influencedbythexpansionof

ourproductionlinesandproductoferings.Inthearlystageofbusinesdevelopmentandbefore

weachieveconomiesofscale,werecordedrevenuefromsalesofalimitednumberofqualified

productswhileincuringsubstantialexpenses,suchasrawmaterialcosts,utilities,employe

expensesandepreciationandamortizationofpropertiesandequipment.In2022,werecorded

groslosesofRMB33.0milion,andin2022and2023,weincurednetlosofRMB175.7

milionandRMB45.7milion,respectively.Aditionaly,in2022and2023,werecordednet

operatingcashoutflowsofRMB64.4milionandRMB68.1milion,respectively.Thosenetloses

andnetoperatingcashoutflowsincuredwereprimarilyatributabletourintensiveworking

capitalandhighlevelofinventories.Whilewerecordedgrosprofitin2023,2024andthethre

monthsendedtheMarch31,2025,andachievedanetprofitin2024andthethremonthsended

March31,2025,thereisnoasurancethatwewilbeabletosustainsuchprofitabilityinthe

future.Se“FinancialInformation—Period-To-PeriodComparisonofResultsofOperations.”

Meanwhile,whilewerecordednetoperatingcashinflowofRMB30.4milionandRMB144.0

milion,respectively,in2024andthethremonthsendedMarch31,2025,thereisnoasurance

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thatwewilnotexperienceperiodsofnetoperatingcashoutflowinthefuture.Ifwecontinueto

recordnetoperatingcashoutflowinthefuture,ourworkingcapitalmaybeconstrainedwhichmay

adverselyafectourbusinesandfinancialcondition.

WeremaincomitedtoactivelyextendingtheaplicationareasofourSiCsubstrates,while

continuingtoexpandourproductoferings.Suchexpansionmaynotbeconsistentlysucesfuland

mayincurlosesiftherevenuefromthesalesofourSiCsubstratesfailstofsetourcosts,which

maymaterialyandadverselyafectourfinancialcondition,resultsofoperationsandprospects.

Ourfutureprofitabilitywildependonavarietyofactors,includingthexpansionand

performancesofourexistingbusines,competitivelandscape,customerpreferenceand

macroeconomicandregulatoryenvironment.Ourevenuesmaynotgrowatheratewexpectand

itmaynotincreasesuficientlytofsetheincreaseinourcostsandexpenses.Wemaycontinue

toincurlosesinthefutureandwecanotasureyouthatwewileventualyachieveourintended

profitability.Inadition,wemaystilrecordnegativecashflowinthefutureandnedtosek

externalfinancingtosuportouroperations,suchasavailablequityfinancingorbankfacilities.

Undetectedefects,failuresoreliabilityisuesinourproductscouldreducethemarket

adoptionofourproducts,damageoureputationorexposeustoproductliabilityandother

claims.

Ourcustomersgeneralyhavestringentspecificationsforquality,performanceandreliability

thatourproductsmustmet.Duetothecomplexproductdesignandproductionproces,our

productsmaycontainundetectedefectsorfailureswhenfirstintroducedoraftercomencement

ofcomercialshipments,whichmightrequireproductreplacementorecal.Further,changesof

rawmaterialusedintheproductionprocesesmaycauseourproductstofail.Ifdefectsand

failuresocurinourproducts,wecouldexperiencelostrevenue,increasedcosts,including

warantyexpensesandcostsasociatedwithafter-saleservices,cancelationsoreschedulingof

ordersorshipments,andproductreturnsordiscounts,anyofwhichwouldharmouroperating

results.

Further,theproductionofourSiCsubstratesinvolveshighlycomplexproceses.For

example,minutelevelsofcontaminantsinthemanufacturingenvironmentcanintroducedefects

duringthecrystalgrowthproces,suchasdislocationsormicropipes,whichdegradethelectrical

andphysicalpropertiesofourSiCsubstrates.Thesedefectscanseverelyafectheperformance

andreliabilityofthendproductsthatadoptourSiCsubstrates.Theseproblemsmaybedificult

todetectatanearlystageoftheproductionprocesandoftenaretime-consuming,expensiveor

imposibletocorect.Theymayalsoresultinclaimsagainstusbyourcustomersorothers,and

subjectustoliabilitiesandamages.Oureputationorbrandmaybedamagedasaresultofthese

RISKFACTORS

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problemsandcustomersmaybereluctantobuyourproducts,whichcouldadverselyafectour

abilitytoretainexistingcustomersandatractnewcustomersandcouldadverselyafectour

busines,financialconditionandresultsofoperations.

Wemaybesubjectoproductliabilityorwarantyclaimsthatcouldresultinsignificant

directorindirectcosts,whichcouldadverselyafectourbusinesandresultsofoperations.

Ourproductsareincorporatedintoavarietyofendproducts.Theuseofendproductsthat

adoptourproductscouldresultinanunsafeconditionorinjuryasaresultof,amongotherfactors,

componentfailures,manufacturingflaws,designdefectsorinadequatedisclosureof

product-relatedrisksorinformation.Thesefactorscouldresultinproductliabilityorwaranty

claims;wecouldbenamedasadefendantinsuchclaims,andanyinsurancethatwecarymaynot

besuficientoritmaynotaplytoalsituations.Similarly,ourcustomerscouldbesubjectedto

claimsasaresultofsuchacidentsandbringclaimsagainstustoholdusacountable.

Inadition,intheventhatourproductsfailtoperformasexpectedorsuchfailureofour

productsresultsinarecal,oureputationmaybedamaged,whichcouldmakeitmoredificultfor

ustoselourproductstoexistingandprospectivecustomersandcouldmaterialyandadversely

afectourbusines,resultsofoperationsandfinancialcondition.

Intheventhatourproductshaveanydefectorqualityisue,wemayberequiredtoprovide

replenishmentoreplacementwithinthespecifiedtimeframeuponreceivingnotificationfromour

customers.Wecouldincursignificantcoststocorectanydefectsorotherproblems,including

costsrelatedtoproductreplenishmentandreplacement.Productreplenishmentandreplacementor

negativepublicitymayresultinlitigation,theocurenceofwhichcouldbecostly,lengthyand

distractingandadverselyafectourbusinesandresultsofoperations.

Anydisruptiontotheoperationofourproductionplantscouldrestrictourordinarybusines

operationsandmaterialyandadverselyafectourfinancialconditionandresultsof

operations.

WehadestablishedtheShandongproductionplantandtheShanghaiproductionplant.The

operationofourproductionplantsmaybedisruptedbyphysicaldamagefromfires,flods,

earthquakes,typhons,poweroutages,mechanicalbreakdowns,telecomunicationsfailures,los

oflicenses,certificationsandpermits,changesingovernmentalplaningfortheunderlyingland,

andregulatorydevelopment,manyofwhicharebeyondourcontrol.Asourproductionproces

requiresubstantialamountsofelectricity,anypoweroutage,disruptionorshortageinpower

suplycouldthereforehaveamaterialyadverseimpactonourproductionandemployesafety.

RISKFACTORS

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Aspartofourproductionoperations,wearengagedincertaininherentlyriskyand

hazardousactivities,including,amongotherthings,useofspecialequipmentandmanagementof

specialgases.Therefore,wearesubjectorisksasociatedwiththeseactivities,includingas

leakages,equipmentfailures,industrialacidents,firesandexplosions.Whilewebelievewehave

adequatesystemsofsafeproductionandrelatedtraining,theseriskscanresultinpersonalinjuries

andfatalities,damagetordestructionofpropertiesorproductionfacilities,andpolutionand

otherenvironmentaldamages.Anyoftheseconsequences,ifsignificant,couldisrupthe

operationofourproductionplantsandresultinbusinesinteruptionandlegaliability,and

materialyandadverselyafectourfinancialconditionandresultsofoperations.

Failuretosucesfulyexecutecapacityexpansionplansandourequipmentmaintenanceand

upgradesortoefectivelyutilizeourproductionplantsmayhaveamaterialadversefecton

ourbusines,financialconditionandresultsofoperations.

Ourgrowthprospectsandfutureprofitabilitydependon,amongotherthings,ourabilityto

upgradetheproductioncapabilityandincreaseproductioncapacity,eithergeneralyorwithrespect

todemandfromcustomersforparticularproducts.

Tosucesfulyupgradeourproductioncapabilityandexpandproductioncapacity,wened

tomakecost-efectiveandeficientupgradeandexpansionplans,expandandconstructnew

facilities,maintainandpurchaseproductionequipment,andhireandtrainprofesionalsnecesary

toperatesuchfacilitiesorequipment,alofwhichmaybeafectedbyseveralfactors,including

butnotlimitedto,thefolowing:

(cid:129)availabilityofworkingcapitalforconstructingfacilitiesorpurchasingequipment;

(cid:129)delaysincompletionofconstructionandshortagesordelaysinthedeliveryof

equipment;

(cid:129)dificultiesordelayswhichmayariseininstalingthequipment;and

(cid:129)implementationofnewproductionproceses.

Wecanotguarantethatourupgradeorexpansionplan,ifimplemented,wilbe

operationalyorfinancialysucesfulandsubstantiatedbysuficientmarketdemandfororprofit

marginofourproducts.Ifweareunabletoimplementheupgradeorexpansionplan

cost-efectivelyandeficiently,ourbusinesandprofitabilitymaybeadverselyafected.

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Inadition,ifwedonotreceivesuficientordersfromourcustomerstoefectivelyutilize

ourproductionplants,wemaybesubjectolowproductionutilizationratesofproductioncapacity

orover-capacityforourproductionplants,whichmayhurtourprofitabilityandresultsof

operations.Furthermore,ifmarketdemandeclinesinthefuture,wemaynotbeabletorecoupthe

costsincuredforconstructionofanynewproductionplantsorexpansionofanyexistingfacilities

andmaintenanceofexpandedproductioncapacity.Further,ourCompanyhasentered,andmayin

thefuturenter,intoagrementsforourexpansionplans.Anydelayorcancelationofour

expansionplanoranyfailuretofulfilrelatedcomitmentscouldalsosubjectustopenaltiesor

disputeswithvariouscounterparties.Asaresult,ourbusines,financialcondition,resultsof

operationsandprospectsmaybematerialyandadverselyafected.

Ourfuturecapitalexpenditureonproperty,plantandequipmentmayresultinanincreasein

ourdepreciationexpensesandmayafectourprofitability.

Ourdepreciationexpensesforourproperty,plantandequipmentamountedtoaproximately

RMB135.2milion,RMB210.9milion,RMB336.2milionandRMB88.0milionfortheyear

endedDecember31,2022,2023,2024andthethremonthsendedMarch31,2025,respectively.

Aspartofourbusinestrategiestoexpandourproductioncapacity,weplantobuildcertainew

propertiesandpurchaseproductionequipmentunderourproductioncapacityexpansionplan.Se

“Busines—OurStrategies”and“FuturePlansandUseofProceds”.Asonastheproperties

andequipmentisputintoperation,theywilresultinaditionalanualdepreciationcharges.The

increaseindepreciationwiladverselyafectourfinancialconditionandresultsofoperations.

Ifwefailtomaintainadequateinventory,orifwemismanageourinventory,wecouldlose

salesorincurhighinventory-relatedexpenses,whichcouldnegativelyafectourfinancial

conditionandresultsofoperations.

Ourinventoriesmainlyincluderawmaterials,workinprogresandfinishedproducts.Asof

December31,2022,2023,2024andMarch31,2025,wehadinventoriesofRMB533.3milion,

RMB843.3milion,RMB1,021.9milionandRMB1,032.9milion,respectively.Ourbusines

modelrequiresustomanageourinventorieseficiently.

Demandfromcustomersmaybeafectedbygeneralmarketconditions,endmarket

conditions,newproductlaunches,pricingandiscounts,andnotalofthemarewithinour

control.Inadition,aswedevelopandmarketanewproduct,wemaynotbesucesfulin

establishingstableandfavorablesuplierelationshipsoracuratelyforecastingdemand.The

acquisitionofcertaintypesofrawmaterialsandconsumablesmayrequiresignificantleadtime

andprepaymentandtheymaynotbereturnable.Furthermore,asweplantocontinuexpanding

ourproductoferings,wexpectoincludeawidervarietyofrawmaterialsandconsumables,

whichwilmakeitmorechalengingforustomanageourinventoryandlogisticsefectively.

RISKFACTORS

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Ourinventoriesarecariedathelowerofcostandnetrealizablevalue.Costcomprisesal

costsofpurchaseandothercostsincuredinbringingtheinventoriestotheirpresentlocationand

condition.Netrealizablevalueisthestimatedselingpriceintheordinarycourseofbusinesles

thestimatedcostsofcompletionandthestimatedcostsnecesarytomakethesale.Se

“FinancialInformation—DiscusionofCertainKeyBalanceShetItems—Inventories.”Ifwe

experienceinventorywrite-down,ourprofitability,financialresultsandprospectswilbe

negativelyafected.

DuringtheTrackRecordPeriod,ourinventoryturnoverdaysdecreasedfrom372.7daysin

2022to235.1daysin2023,primarilyduetourincreasedsales.Ourinventoryturnoverdaysthen

increasedfrom235.1daysin2023to255.4daysin2024,primarilyasaresultofahigher

inventorybalanceof8-inchSiCsubstratesasofDecember31,2024,reflectingourefortstostock

upinresponsetorisingdemandandtoensuretimelydeliveryoflarge-sizeSiCsubstrateorders.In

thethremonthsendedMarch31,2025,ourinventoryturnoverdaysincreasedfrom255.4daysin

2024to293.0days,primarilydueto(i)arelativelylowercostofsalesand(i)atemporary

slowdowninsalesatributabletotheSpringFestivalholidayduringthesameperiod.The

fluctuationsinourinventoryturnoverdayscouldafectourworkingcapitaleficiencyby

temporarilytyingupcashinunsoldinventoriesorincreasingtheriskofstockouts.Duringthe

TrackRecordPeriod,thefluctuationsinourinventoryturnoverdayshasubstantialyimpacted

ourcashconversioncycle,ametricmeasuringtheficiencyofourworkingcapitalmanagement,

whichdecreasedfrom362.3daysin2022to148.5daysin2023,andthenremainedrelatively

stableat160.2daysin2024andincreasedto248.9daysinthethremonthsendedMarch

31,2025.Aditionaly,ourelativelylonginventoryturnoverdayscouldexposeustorisksuchas

inventoryobsolescenceandpotentialwrite-downs.Wecanotguarantethatourinventorylevels

wilbeabletoswiftlymethedemandsofcustomers,whichmayadverselyafectourevenue.

Wealsocanotguarantethatalofourinventorycanbesoldasproductswithinareasonabletime

period.Ifwefailtomanageourinventoryefectively,wemaybesubjectoincreasedinventory

storagecosts,aheightenedriskofinventoryobsolescence,adeclineininventoryvalueand

significantinventorywrite-ofs.Anyoftheabovemaymaterialyandadverselyafectouresults

ofoperationsandfinancialcondition.Ontheotherhand,ifweunderestimatedemandforour

products,orifoursupliersfailtosuplyinatimelymaner,wemayexperienceinventory

shortages,whichmightresultindiminishedcustomerbaseandlostofrevenue,anyofwhichcould

harmourbusines,financialconditionandresultsofoperations.

Ifweareunabletomanufactureordeliverhigh-qualityproductsonscheduleandonalarge

scale,ourbusinesmaybematerialyandadverselyafected.

MasproductionofourSiCsubstratesiscrucialtourfuturefinancialprospects.Wecontrol

thentireproductionprocestotimelymetourcustomers’shipmentorders.However,wemay

facedificultiesmanagingourproductionfacilitiesandmetingourdeliverydeadlineswhenthere

RISKFACTORS

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isasurgeincustomerdemand.Ifanyofourproductionfacilitiesexperiencesinteruptions,delays

ordisruptionsinsuplyingproducts,ourabilitytodeliverproductstocustomerswouldbe

impeded.Failuretofulfilcustomers’requirementsandqualitycontrolproblemsthatocurinthe

manufacturingprocescouldpreventusfrometingthestipulatedeliverydeadline.For

example,adeclineinyieldwouldadverselyafectourproductioneficiencyandproductquality.

Wemayalsoexperiencedelaysinshipmentscausedbyourthird-partylogisticserviceproviders.

Thesedelaysorproductqualityisuescouldhaveanimediateandmaterialadversefectonour

abilitytofulfilordersandamageoureputationandbrand,afectingourbusines,resultsof

operationsandfinancialcondition.

Further,ifourproductionfacilitiesorsupliersexperienceanydificultiesorshortagesof

rawmaterials,orifoursupliersareotherwiseunableorunwilingtocontinuetoprovideraw

materialsinrequiredvolumesoratal,oursuplymaybedisrupted,andwemayberequiredto

sekalternatesourcesofsuply.Theproceswouldbetime-consumingandcouldbecostlyand

impracticable.Interuptionstosuplywilhaveanadversefectonourabilitytometscheduled

productdeliveriesandsubsequentlyleadtothelosofsales.

Ourbrandisintegraltoursuces.Ifwefailtoefectivelymaintain,promoteandenhance

ourbrand,ourbusinesandcompetitiveadvantagemaybeharmed.

Webelievethatmaintainingandenhancingourwel-recognizedbrandiscrucialtothe

sucesofourbusinesandsustainingourmarketposition.Weoperateinahighlycompetitive

marketcharacterizedbyrapidtechnologicalevolution,swiftchangesincustomerdemandsand

preferences,frequentintroductionofnewproducts,andtheconstantemergenceofnewindustry

standardsandpractices.

AsasemiconductorcompanyfocusingontheR&DandproductionofSiCsubstrates,weface

competitionandchalengesfromvariousmarketparticipants,includingfablescompanies,foundry

companies,andothersemiconductorcompaniesenteringtheSiCsubstratemarket.Fables

companiesposesdesigncapabilitiesandtechnologicalprowes,whilefoundrycompanieshave

competitiveproductionadvantages.Furthermore,establishedIDMcompaniesthathavehistoricaly

specializedinsilicon-basedsemiconductorsarenowenteringtheSiCsubstratemarket,leveraging

theirwel-establishedinfrastructureandexpertise.Thesecompaniespresentachalengeasthey

bringdecadesofexperienceinlarge-scaleproductionandanexistingcustomerbase,whilealso

rampingupefortstoadaptheirproductionlinestoSiCsubstratetechnology.

Inadition,thesucesfulpromotionofourbrandwildependonthefectivenesofour

marketingefortsandword-of-mouthreferalswereceivefromsatisfiedcustomers.Wemayincur

extraexpensesinpromotingourbrand.Theresultsofsuchinitiativesmaynotcoverthecostsof

theincreasedinvestment.Wecanotguarantethatourmarketingefortswilbesucesful,orthat

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theywilyieldsignificantbenefitsthatjustifythecosts.Anysuchfailuremayresultinour

decliningmarketrecognitionandposition,andmaterialyandadverselyafectourbusines,

financialconditionandresultsofoperations.

Anincreaseinpricesofrawmaterialsorshortageinsuplymaydisruptoursuplychain,

increaseourproductioncostsandelaydeliveriesofourproductstocustomers.

Wedependonthird-partysuplierstoprovideavarietyofmaterialsnecesaryforthe

manufacturingofourSiCsubstrates,includingcarbonpowder,siliconpowder,graphitethermal

insulationmaterials,andequipmentforcrystalgrowth,slicing,grindingandpolishing.Our

materialcostsalocatedtocostofsalesamountedtoRMB256.2milion,RMB734.9milion,

RMB733.8milion,RMB202.5milionandRMB155.1milion,respectively,in2022,2023,2024,

andthethremonthsendedMarch31,2024and2025,representing56.9%,68.8%,55.1%,60.6%

and49.2%ofourtotalcostofsalesfortherespectiveperiods.Ouractualproductionand

productioncostsdependonourabilitytosourcekeyrawmaterialsatcompetitiveprices.However,

therawmaterialsweusearesubjectopricevolatilitycausedbyexternalfactors,suchas

comoditypricefluctuations,changesinsuplyandemand,logisticsandprocesingcosts,our

bargainingpowerwithsupliers,inflationandgovernmentalregulationsandpolicies.Wetypicaly

negotiatepriceswithoursupliersonananualbasisorthroughabidingproces,andwesetout

thetermsinframeworkagrementsthatgeneralyspanaperiodofonetothreyears.Wehave

adoptedcomprehensivepoliciesandmeasurestomanagethepricefluctuationsofrawmaterials.

Se“Busines—ProcurementandSuplyChainManagement—RawMaterialsand

Procurement.”

Anyshortagesordelayinthesuplyofourawmaterialscouldresultinocasionalprice

adjustmentsorcausedelaysinourproductionandeliverytocustomers.Wemayinthefuture

experiencepricefluctuationsandsuplyshortagesofcertainrawmaterials,andthepredictability

oftheavailabilityandpricingofthesematerialsmaybelimited.Ifweareunabletokepupwith

demandforourproductsbecauseofailingtobtainthematerialsnededtosucesfuly

manufactureandeliverourproductsinatimelymaner,ourbusinescouldbematerialy

impaired,andmarketaceptanceforourproductscouldbeadverselyafected.

Wearexposedtoconcentrationriskofrelianceonourmajorcustomersandsupliers.

DuringtheTrackRecordPeriod,wegeneratedamajorityportionofourevenuefromour

majorcustomers,primarilyincludingsemiconductormanufacturers.Revenuegeneratedfromour

fivelargestcustomersineachyearduringtheTrackRecordPeriodacountedfor65.0%,51.3%,

57.2%and52.9%ofourtotalrevenue,respectively,in2022,2023,2024andthethremonths

endedMarch31,2025.Meanwhile,duringtheTrackRecordPeriod,wereliedonsupliersthat

renderedrawmaterialsforourproductionofSiCsubstratesaswelasconstructionservices.

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Purchasesfromourfivelargestsupliers(excludingconstructionserviceproviders)ineachyear

duringtheTrackRecordPeriodacountedfor39.1%,35.9%,45.6%and49.9%ofourtotal

purchases,respectively,in2022,2023,2024andthethremonthsendedMarch31,2025.

Ourelianceonthesemajorcustomersandsupliersubjectsustoconcentrationand

counterpartyriskfromthesecustomersandsupliers.Wecanotasureyouthatwewilbeableto

maintainourelationshipswithourmajorcustomersandsupliersinthefuture.Moreover,we

canotguarantethatourmajorcustomersorsuplierswilnothaveachangeofbusinescopeor

businesmodelorwilcontinuetomaintaintheirmarketpositionandreputation.Anymaterial

adversechangetotheoperation,financialperformanceorfinancialconditionofourmajor

customersandsupliersmayresultinmaterialadverseimpactontheirbusineswithus.For

example,ifourmajorcustomersceasetopurchaseourproducts,orifthesuplyofasemblyand

testingservicesisdisruptedordelayed,therecanbenoasurancethatwewilbeabletofindnew

customerswithsimilarlevelofdemandsornewsuplierswithsimilarsuplycapacityon

comparablecomercialtermswithinareasonabletimeperiod,oratal.Shouldanyoftheseocur,

ourbusines,financialcondition,resultsofoperationsandprofitabilitymaybeadverselyafected.

Werelyonthird-partyserviceprovidersandbusinespartnerstoprovideproductsand

servicestousandourcustomers.

Weworkwithcertainthird-partyserviceprovidersandbusinespartners,includinglogistic

serviceproviders.Thesethirdpartiesarealsosubjectotheirownrisksrelatingtobusines

interuption,systemsandemployefailures,andcybersecurityandataprotection,andarealso

subjectotheirownlegal,regulatoryandmarketrisks.

Ourthird-partyserviceprovidersandbusinespartnersmaynotfulfiltheirespective

comitmentsandresponsibilitiesinatimelymanerandinacordancewiththetermsagred

uponoraplicablelaws.Inadition,whilewehaveproceduresinplaceforasesingrisksalong

withselecting,managingandmonitoringourelationshipswiththird-partyserviceproviders,

supliersandbusinespartners,wedonothavecontrolovertheirbusinesoperationsor

governanceandcompliancesystems,practicesandprocedures,whichmayincreaseourfinancial,

legal,operationalandreputationalrisk.Ifweareunabletoefectivelymanageourelationships

withthird-partyserviceproviders,supliersandbusinespartners,orforanyreasonour

third-partyserviceproviders,supliersorbusinespartnersfailtosatisfactorilyfulfiltheir

comitmentsandresponsibilities,ourbusines,resultsofoperationsandfinancialconditioncould

sufer.Uponexpiryofexistingcontractswiththirdparties,wemaynotbeabletorenewsuch

contractsatermscomercialyfavorabletous,ifatal,orfindanapropriatesubstituteina

timelymaner,inwhichcaseourbusinesmaybeadverselyafected.

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Wemaynedtoraiseaditionalcapitalinthefutureinordertoexecuteourbusinesplan,

whichmaynotbeavailableonaceptableterms,oratal.

Wemaynedaditionalcapitalinthefuturetofundourcontinuedoperations,andwemay

beunabletoraiseaditionalfunds,whetherthroughequityordebtfinancing,whenededon

favorableterms,oratal.Ifwedoraiseaditionalcapitalthroughpublicorprivatequity

oferings,theownershipinterestofourexistingshareholders,includinginvestorsinthisofering,

wilbediluted,andthetermsofthesesecuritiesmayincludeliquidationorotherpreferencesthat

adverselyafectourshareholders’rights.Ifweraiseaditionalcapitalthroughdebtfinancing,we

maybesubjectocovenantslimitingorestrictingourabilitytotakespecificactions,suchas

incuringaditionaldebt,makingcapitalexpendituresordeclaringdividends.Anyfailuretoraise

capitalasandwhenededcouldhaveanegativeimpactonourfinancialconditionandonour

abilitytopursueourbusinesplansandstrategies.

Wemaybexposedtocreditriskarisingfromourtradereceivables.Failuretocolectour

tradereceivablesinatimelymaneroratalcouldhaveamaterialandadverseimpacton

ourbusines,financialcondition,liquidityandprospects.

Ourtradeandothereceivablesprimarilyincludetradereceivables,bilsreceivablesand

othereceivables.AsofDecember31,2022,2023,2024andMarch31,2025,ourtradeandother

receivablesamountedtoRMB176.3milion,RMB393.2milion,RMB575.8milionand

RMB555.8milion,respectively.Se“FinancialInformation—DiscusionofCertainKeyBalance

ShetItems—TradeandOtherReceivables”inthisprospectus.

Wecanotasureyouthatwewilbeabletocolectaloranyofourtradereceivableson

time,oratal.Ourcustomersmayfaceunexpectedcircumstances.Ourtradereceivablesturnover

daysdecreasedfrom85.7daysin2022to65.2daysin2023,primarilyasaresultofourenhanced

managementoftradereceivables.Ourtradereceivablesturnoverdaysthenincreasedto85.6days

in2024,andfurtherincreasedto115.8daysinthethremonthsendedMarch31,2025,primarily

becauseweprovidedlongercreditperiodtourcustomersonacase-by-casebasistomaintain

strongrelationshipsasaresultofourincreasedsales.Wemaynotbeabletoreceivesuch

customers’paymentofuncolectedebtsinful,oratal,andmaybexposedtocreditrisk.The

ocurenceofsucheventwouldmaterialyandadverselyafectourfinancialconditionandresults

ofoperations.

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Thefairvalueofourfinancialasetsatfairvaluethroughprofitorlosmayface

uncertaintiesandbesubjectofluctuationsasthevaluationofitsfairvalueinvolvestheuse

ofunobservableinputs.

DuringtheTrackRecordPeriod,werecordedfinancialasetsatfairvaluethroughprofitor

los(“FVPL”)whichprimarilyconsistedofbankdepositsinthePRCandJapanwithvariable

interestrates.WehadfinancialasetsatFVPLofRMB1,792.1milion,RMB277.1milion,

RMB2.1milionandRMB1.9milion,respectively,asofDecember31,2022,2023,2024andthe

thremonthsendedMarch31,2025.Wemanagedandevaluatedtheperformanceofinvestments

onafairvaluebasisinacordancewithourbusinesnedsandinvestmentstrategy.Detailsofthe

fairvaluemeasurementofinancialasetsatFVPL,particularlythefairvaluehierarchy,the

valuationtechniquesandkeyinputs,includingsignificantunobservableinputs,andtherelationship

ofunobservableinputstofairvaluearedisclosedinNote23totheAcountants’Reportin

ApendixItothisprospectus.Thefairvalueofourfinancialasetsmeasuredatfairvaluethrough

profitorlosisubjectopotentialfluctuations.Thevaluationoftheseasetsinvolvestheuseof

unobservableinputs,whichcanbeinherentlysubjectiveandmaynotacuratelyreflectmarket

conditions.Changesinasumptionsormethodologiesusedinthevaluationprocescouldleadto

substantialvariationsinthereportedfairvalueofthesefinancialasets.Consequently,anyadverse

changesinthefairvalueoftheseasetscouldmaterialyandadverselyafectourfinancial

conditionandresultsofoperations.

Wehavegranted,andmaycontinuetogrant,certainawardsunderourshareincentive

schemes,whichmayresultinincreasedshare-basedcompensationexpenses,afectour

financialconditionandresultsofoperations,andpotentialydilutetheshareholdingofour

existingshareholders.

Weadoptedshareincentiveschemes,includingshare-basedcompensation,forthebenefitof

ourDirectors,Supervisorsandemployestoincentivizeandrewardtheligiblepersonswhohave

contributedtoursuces.In2022,2023,2024andthethremonthsendedMarch31,2024and

2025,weincuredshare-basedpaymentsofnil,nil,RMB10.2milion,nilandRMB5.2milion,

respectively.Webelievethegrantingofshare-basedcompensationisofsignificantimportanceto

ourabilitytoatractandretainkeypersonelandemployes.Nevertheles,share-based

compensationexpenseswouldpotentialydilutetheshareholdingofexistingshareholders.Wemay

continuetograntshare-basedcompensationawardstoemployesinthefuture.Asaresult,our

expensesasociatedwithshare-basedcompensationmayincrease,whichmayafectourfinancial

conditionandresultsofoperations.Wemayre-evaluatethevestingschedules,lock-uperiod,or

otherkeytermsaplicabletothegrantsundertheshareincentiveschemefromtimetotime.Ifwe

chosetodoso,wemayexperienceasubstantialchangeinourshare-basedcompensation

expensesinthereportingperiodsfolowingthisofering.

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Downturnsorvolatilityinglobaleconomiconditionscouldhaveamaterialadversefecton

ourbusines,financialcondition,resultsofoperationsandliquidity.

Oursalesandprofitabilitydependsignificantlyonglobaleconomiconditionsandthe

demandforthendproductsinthemarketsinwhichourcustomerscompete.Weaknesesinthe

economyandfinancialmarketscanleadtolowerdemandinourtargetproductgroups.Economic

uncertaintyafectsbusinesesuchasoursinanumberofways,makingitdificultoacurately

forecastandplanourfuturebusinesactivities.Adeclineinend-userdemandcanafecthe

demandofcustomersforourproducts,andthetighteningofcreditinfinancialmarketsmaylead

consumersandbusinesestopostponespending,eitherofwhichmaycauseourcustomersto

cancel,decreaseordelaytheirexistingandfutureorderswithus.

Wemaynotacuratelyasestheimpactofchangingmarketandeconomiconditionsonour

businesandoperations.Anyadversechangesinglobaleconomiconditions,includingany

recesion,economicslowdownordisruptionofcreditmarkets,mayalsoleadtolowerdemandfor

ourproducts.Inadition,financialdificultiesexperiencedbyoursuplierscouldresultinproduct

delays,increasedacountsreceivabledefaultsandinventorychalenges.Althesefactorsrelatedto

globaleconomiconditions,whicharebeyondourcontrol,couldadverselyimpactourbusines,

financialcondition,resultsofoperationsandliquidity.

Anyfailuretobtainrequisiteaprovals,licensesorpermitsaplicabletourbusines

operationmayhaveamaterialandadverseimpactonourbusines,financialconditionand

resultsofoperations.

Inacordancewiththelawsandregulationsinthejurisdictionsinwhichweoperate,weare

requiredtomaintainvariousaprovals,licenses,permitsandcertificationsinordertoperateour

busines.Complyingwithsuchlawsandregulationsmayrequiresubstantialexpenseandmay

imposeasignificantburden,whileanynoncompliancemayexposeustoliability.Furthermore,the

regulatoryrequirementsofcertainsectors,suchasdatasecurityandcybersecurity,arerelatively

newandcontinuouslyevolving.Therefore,withtheintroductionandenactmentofnewlawsand

regulations,aswelastherefinementofinterpretationsandaplicationsofexistingones,we

canotasureyouthatwewilnotbefoundinviolationofanyfuturelaws,regulationsand

policiesoranyofthelaws,regulationsandpoliciescurentlyinefectduetochangesand

developmentsinthisregard.Ifwefailtomaintaincompliancewithlaw,orotherwisefailto

complete,obtainormaintainanyoftherequiredlicensesoraprovalsormakethenecesary

filingsinanyofthejurisdictionswhereweoperateourbusines,wemaybesubjectoadverse

consequences.

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Inadition,intheventhatwearerequiredtorenewourexistinglicensesorpermitsor

acquirenewones,whetherasaresultofthepromulgationofnewlawsandregulationsor

otherwise,wecanotasureyouthatwewilbeabletometherequisiteconditionsand

requirements,orobtainalrequisiteaprovals,licenses,permitsandcertificationsinatimely

maner.Ifweareunabletobtain,orexperiencematerialdelaysinobtaining,necesary

governmentaprovals,ouroperationsmaybesubstantialydisrupted,whichcouldmaterialyand

adverselyafectourbusines,financialconditionandresultsofoperations.

Securitybreachesandotherdisruptionscouldcompromiseourconfidentialandproprietary

information,whichcouldcauseourbusinesandreputationtosufer.

Inthecourseofourbusinesoperations,wecolect,storeandprocesbusinesand

transactiondata.Se“Busines—DataSecurityandPrivacy.”Thesecuremaintenanceofsuch

dataiscritical.Despiteourdatasecurityandprotectionmeasures,ourinformationtechnologyand

infrastructuremaybevulnerabletobreachesbyhackers,employeror,malfeasanceorother

disruptionsuchasnaturaldisasters,powerlosesortelecomunicationfailures.Anysuchbreach

couldcompromiseournetworksandtheinformationstoredtherein,posiblyresultinginlegaland

regulatoryactions,disruptionofoperationsandcustomerservices,andotherwiseharmingour

busines,reputationandfutureoperations.

Ouremployesorotherthirdpartiesmayengageinmisconductorotherimproperactivities,

includingnoncompliancewithregulatorystandardsandrequirements,whichcouldcause

significantliabilityforus,harmoureputationorotherwiseresultinotherconsequencesthat

mayhaveamaterialadversefectonourbusines,financialconditionandresultsof

operations.

Misconductcouldincludeviolationsoflaws,fraudorotherimproperactivities.Examples

couldincludethefailuretocomplywithourpoliciesandproceduresorwithregulatory

requirementsrelatingtoenvironmental,healthorsafetymaters,import-exportcontrols,lobying

orsimilaractivities,andanyotheraplicablelawsoregulations.Theprecautionsthatwehave

implementedmaynotpreventalmisconduct,and,asaresult,wecouldfaceunknownrisksor

loses.Ourfailuretocomplywithaplicablelawsoregulationsduetomisconductorother

improperactivitiesbyanyofouremployes,supliers,agentsorbusinespartnerscouldamage

oureputationandmaysubjectustofinesandpenalties,restitutionorotherdamages,orlosof

curentandfuturecustomercontracts,anyofwhichwouldadverselyafectourbusines,financial

conditionandresultsofoperations.

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Wemaynothavesuficientinsurancecoveragetocoverourpotentialiabilityorlosesand,

asaresult,ourbusines,financialcondition,resultsofoperationsandprospectsmaybe

materialyandadverselyafectedshouldanysuchliabilityorlosesarise.

Wefacevariousrisksinconectionwithourbusinesandmaylackadequateinsurance

coverageorhavenorelevantinsurancecoverage.AsoftheLatestPracticableDate,weobtained

andmaintainedinsurancepoliciesthatwebelievearecustomaryforbusinesesofoursizeand

typeandinlinewithstandardcomercialpracticeinChina,andwehadnotmaintainedproduct

liabilityinsuranceoranybusinesinteruptionorlitigationinsurance.Se“Busines—

Insurance.”Wecanotguarantethataproductliabilityclaimorotherlitigationwilnotbe

broughtagainstusinthefuture,orthatwewilbeabletopurchaseproductliabilityinsuranceor

otherelatedinsuranceonaceptableterms.Ifweweretoincursubstantialosesorliabilitiesdue

tofire,explosions,flodsorothernaturaldisasters,disruptioninournetworkinfrastructure,

productionfacilitiesorbusinesoperations,oranymaterialitigation,ouresultsofoperations

couldbematerialyandadverselyafected.Ourcurentinsurancecoveragemaynotbesuficient

topreventusfromsuferinganylosandthereisnocertaintythatwewilbeabletosucesfuly

claimourlosesunderourcurentinsurancepolicyonatimelybasis,oratal.Ifwewereheld

liableforuninsuredlosesoramountsandclaimsforinsuredlosesexcedingthelimitsofour

insurancecoverage,ourbusines,financialcondition,resultsofoperationsandprospectsmaybe

materialyandadverselyafected.

Wearesubjectopotentialmaterialandadversefectsinrespectodefectsinourexisting

propertiesownedandleasedinChina.

AsoftheLatestPracticableDate,dueto(i)thelackofpre-constructionfilingandincomplete

constructionqualityandsafetysupervisionprocedures,or(i)ourfailuretocompletethefiling

withrelevantcompetentauthoritieswithin15daysafterpasingthecompletionaceptance

inspection,wehadnotobtainedthetitlecertificatesforcertainofthepropertiesweowned.In

adition,weleasedcertainpropertiesweownedforusagethatdoesnotalignwiththeusage

registeredontheirbuildingplaningpermits.AsadvisedbyourPRCLegalAdvisor,wemaybe

subjectofinesandmaybeorderedtorectifysuchdefectiveneswithinacertaintimeperiod.

AsoftheLatestPracticableDate,weprimarilyleasedthrepropertiesforproductionand

operationactivitieswithanagregategrosflorareaof16,276.8sq.masourproductionfacilities

andofices.AsoftheLatestPracticableDate,wehadnotcompletedtheregistrationofleasefiling

foralthreleasedpropertieswiththerelevantcompetentauthoritiesinacordancewithaplicable

lawsandregulationsinChina.AsadvisedbyourPRCLegalAdvisor,thelackofregistrationof

leasefilingdoesnotafectheirvalidityofleaseagrements,oresultinusbeingrequiredto

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vacatefromtheseleasedproperties,butwemaybeorderedbyrelevantcompetentauthoritiesto

completetheregistrationwithinadesignatedtimeperiod,andmaybesubjectofinesfrom

RMB1,000toRMB10,000foreachleaseagrementhatwefailtoregisterwithinthetimeperiod.

AsoftheLatestPracticableDate,thelandlordsoftwofourleasedpropertieshadnot

provideduswiththecompleteandvalidpropertyownershipcertificates.Inadition,thecurent

useofoneoftheleasedpropertiesisdiferentfromtheplanedusestatedonitsproperty

ownershipcertificate,whichmayresultinthelandlordbeingorderedtorectifywithinacertain

timeperiod.Iftheleaseagrementsoftheabovementionedleasedpropertiesaredemedinvalid,

orifwenedtovacatetheabovementionedleasedproperties,thereisnoasurancethatwecould

timelyrelocatetoalternativepremisesorenterintoleaseagrementsoncomparablecomercial

terms.

Ourpropertyvaluationisbasedoncertainasumptionswhich,bytheirnature,aresubjective

anduncertainandmaymaterialydiferfromactualresults.

ValuationsofourselectedpropertyinterestasofMay31,2025preparedbyAsia-Pacific

ConsultingandApraisalLimited,anindependentpropertyvaluer,aresetforthinthevaluation

reportsetoutasApendixItothisprospectus.Thevaluationsaremadebasedonasumptions

which,bytheirnature,aresubjectiveanduncertainandmaydiferfromactualresults.Inadition,

unforeseablechangesingeneralandlocaleconomiconditionsorotherfactorsbeyondour

controlmayafecthevalueofourproperties.Asaresult,thevaluationofourpropertiesmay

difermaterialyfromthepricewecouldreceiveinanactualsaleofthepropertiesinthemarket

andshouldnotbetakenastheiractualrealizablevalueoranestimationoftheirealizablevalue.

Wefacerisksrelatedtonaturaldisasters,healthepidemicsandotheroutbreaks,whichcould

significantlydisruptouroperations.

Ourbusinescouldbematerialyandadverselyafectedbynaturaldisasters,suchas

snowstorms,earthquakes,firesorflods,outbreaksofawidespreadhealthepidemicorpandemic,

orothereventsuchaswars,actsofterorism,environmentalacidents,poweroutagesor

comunicationinteruptions.Sucheventsmayalsosignificantlyafectourindustryandmayeven

causeatemporaryclosureofthefacilitiesweorourbusinespartnersuseforouroperations,

whichwouldseverelydisruptouroperationsandhaveamaterialadversefectonourbusines,

financialconditionandresultsofoperations.Ouroperationscouldbedisruptedifanyofour

employesoremployesofourbusinespartnersweresuspectedofhavinganyofthepidemicor

pandemicilneses,sincethiscouldrequireusorthemtoquarantinesomeoralofsuch

employesordisinfecthefacilitiesusedforouroperations.Inadition,ourevenueand

profitabilitycouldbematerialyreducedtothextenthatanaturaldisaster,healthepidemicor

pandemicorotheroutbreaksharmtheglobalorPRCeconomyingeneral.

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RISKSRELATINGTOURBUSINESANDINDUSTRYINTHEPRINCIPALPLACEOF

OURBUSINES

Changesinglobaleconomic,politicalorsocialconditionsorgovernmentpoliciesinthe

countriesandregionswhereweoperatecouldhaveamaterialandadversefectonour

businesandoperations.

Theglobaleconomic,politicalandsocialconditionsarevolvingrapidlyandaresubjecto

uncertainties.Geopoliticaltensionandconflicts,energycrisis,inflationrisk,interestrate

increases,instabilityinthefinancialsystem,andthetighteningofmonetarypolicybytheU.S.

FederalReserveimposenewchalengesanduncertaintiesontheglobaleconomy.Itisunclear

whetherthesechalengesanduncertaintieswilbecontainedoresolved,andwhatefectsthey

mayhaveontheglobalpoliticalandeconomiconditionsinthelongterm.Furthermore,sanctions

andexportcontrolmeasuresareunilateralyimposedbytheU.S.orotherjurisdictionsfromtime

totime.Thesemeasuresmayhaveasignificantimpactonthetargetedcountries,marketsand/or

entities.Chinesecompaniesmaybeafectedbysuchsanctionsorexportcontrolmeasures.Wemay

alsobexposedtorisksindealingwithbusinespartnersubjectosanctionsorexportcontrols.

Asaresult,wecouldberequiredtoincuraditionalcoststocomplywiththesecomplicated

regulationsandmeasuresandcouldfacepenaltiesforanyviolation,evenifinadvertent.

SubstantialyalofouroperationsarelocatedinChina.Acordingly,ourbusines,financial

condition,resultsofoperationsandprospectsmaybeinfluencedtoasignificantdegreby

political,economicandsocialconditionsinChinageneralyandbycontinuedeconomicgrowthin

Chinasawhole.

TheChineseconomyhasexperiencedsignificantgrowthoverthepastdecades,andthe

Chinesegovernmenthasimplementedvariousmeasurestoencourageconomicgrowth.These

measuresmaybenefitheoveralChineseconomy,butmaynothavethesamefectonus.Any

economicdownturn,whetheractualorperceived,decreaseineconomicgrowthratesoran

otherwiseuncertaineconomicoutlokinourgeographicmarketsoranyothermarketinwhichwe

mayoperatecouldafectourbusines,financialconditionandresultsofoperations.

HoldersofourHSharesmaybesubjectoPRCincometaxondividendsfromusoronany

gainrealizedonthetransferofourHShares.

Asiscustomarywithalmajoreconomies,Chinahastaxtreatiesorsimilararangements

withjurisdictionsacrostheworld.UndertheEITLawanditsimplementationrulesandNoticeon

theIsuesconcerningWitholdingtheEnterpriseIncomeTaxontheDividendsPaidbyChinese

ResidentEnterprisestoH-shareHoldersWhichAreOverseasNon-residentEnterprises(《关于中国

居民企业向境外H股非居民企业股东派发股息代扣代缴企业所得税有关问题的通知》)(GuoShui

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Han[2008]No.897)(国税函[2008]897号),datedNovember6,2008,isuedbytheSTA,subject

toanyaplicabletaxtreatyorsimilararangementbetwenChinandyourjurisdictionof

residencethatprovidesforadiferentincometaxarangement,PRCwitholdingtaxatherateof

10%isnormalyaplicabletodividendsfromPRCsourcespayabletoinvestorsthatareresident

enterprisesoutsideofthePRC,whichdonothaveanestablishmentoraplaceofbusinesinthe

PRC,orwhichavesuchestablishmentorplaceofbusinesiftherelevantincomeisnot

efectivelyconectedwiththestablishmentorplaceofbusines.Anygainrealizedonthetransfer

ofsharesbysuchinvestorsisubjecto10%(oralowerate)PRCincometaxifsuchgainis

regardedasincomederivedfromsourceswithinthePRCunlesatreatyorsimilararangement

otherwiseprovides.

UndertheIndividualIncomeTaxLawofthePRC(《中华人民共和国个人所得税法》)andits

implementationrules,incomeandgainsfromsourceswithinthePRCpaidtoforeignindividual

investorswhoarenotresidentsinthePRCaregeneralysubjectoaPRCwitholdingtaxatarate

of20%,unlespecificalyexemptedbythetaxauthorityoftheStateCounciloreducedor

eliminatedbyanaplicabletaxtreaty.PursuantotheCircularonQuestionsConcerningthe

ColectionofIndividualIncomeTaxFolowingtheRepealofGuoShuiFa[1993]No.045(《关于

国税发[1993]045号文件废止后有关个人所得税征管问题的通知》)(GuoShuiHan[2011]No.348)

(国税函[2011]348号)datedJune28,2011,isuedbytheSTA,dividendspaidtonon-PRCresident

individualholdersofHSharesaregeneralysubjectoindividualincometaxofthePRCathe

witholdingtaxrateof10%,dependingonwhetherthereisanyaplicabletaxtreatybetwenthe

PRCandthejurisdictioninwhichthenon-PRCresidentindividualholderofHSharesresidesas

welasthetaxarangementbetwenthePRCandHongKong.Non-PRCresidentindividual

holderswhoresideinjurisdictionsthathavenotenteredintotaxtreatieswiththePRCaresubject

toa20%witholdingtaxondividendsreceivedfromus.However,pursuantotheCircular

DeclaringthatIndividualIncomeTaxContinuestobeExemptedoverIncomeofIndividualsfrom

TransferofShares(《关于个人转让股票所得继续暂免征收个人所得税的通知》)(CaiShui

[1998]NO.61)(财税[1998]61号)isuedbytheMOFandtheSTAonMarch30,1998,gainsof

individualsderivedfromthetransferoflistedsharesofenterprisesmaybexemptfromindividual

incometax.Inadition,onDecember31,2009,theMOF,theSTAandtheCSRCjointlyisued

theCircularonRelevantIsuesConcerningtheColectionofIndividualIncomeTaxoverthe

IncomeReceivedbyIndividualsfromTransferofListedSharesSubjectoSalesLimitation(《关于

个人转让上市公司限售股所得征收个人所得税有关问题的通知》)(CaiShui[2009]No.167)(财

税[2009]167号)whichstatesthatindividuals’incomefromthetransferoflistedsharesoncertain

domesticexchangeshalcontinuetobexemptedfromindividualincometax,exceptforthe

relevantshareswhicharesubjectosalesrestrictionsasdefinedintheSuplementaryCircularon

RelevantIsuesConcerningtheColectionofIndividualIncomeTaxovertheIncomeReceivedby

IndividualsfromTransferoftheListedSharesSubjectoSalesLimitations(《关于个人转让上市

公司限售股所得征收个人所得税有关问题的补充通知》)(CaiShui[2010]No.70)(财税[2010]70

RISKFACTORS

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号).AsoftheLatestPracticableDate,theaforesaidprovisionhasnotexpreslyprovidedthat

individualincometaxshalbecolectedfromnon-PRCresidentindividualsonthesaleofsharesof

PRCresidententerpriseslistedonoverseastockexchanges.

IfanyPRCincometaxiscolectedfromthetransferofourHSharesorondividendspaidto

ournon-PRCresidentinvestors,thevalueofyourinvestmentinourHSharesmaybeafected.

Furthermore,ourShareholderswhosejurisdictionsofresidencehavetaxtreatiesorarangements

withthePRCmaynotqualifyforbenefitsundersuchtaxtreatiesorarangements.

Youmayexperiencedificultiesinefectingserviceoflegalprocesandenforcingjudgments

againstusandourmanagement.

WeareacompanyincorporatedunderthelawsofthePRCandsubstantialyalofour

busines,asetsandoperationsarelocatedinChina.Inadition,themajorityofourDirectors,

SupervisorsandexecutiveoficersresideinChina,andsubstantialyaloftheasetsofsuch

Directors,SupervisorsandexecutiveoficersarelocatedinChina.Asaresult,itmaynotbe

posibleforyoutodirectlyefectserviceofprocesuponusorsuchDirectors,Supervisorsor

executiveoficerswhoresideinChina,includingwithrespectomatersarisingunderU.S.federal

securitieslawsoraplicablestatesecuritieslaws.PursuantoArangementsforReciprocal

RecognitionandEnforcementofJudgmentsinCivilandComercialCasesbetwenCourtsofthe

MainlandandHongKongSpecialAdministrativeRegion(《关于内地与香港特别行政区法院相互

认可和执行民商事案件判决的安排》)efectiveonJanuary29,2024,promulgatedbytheSupreme

People’sCourt,apartywithanenforceablefinalcourtjudgmentrenderedbyanydesignated

people’scourtofChinaoranydesignatedHongKongcourtwithrespectoanyciviland

comercialcasesexcludingcertaintypesofwhich,mayaplyforecognitionandenforcementof

thejudgmentintherelevantpeople’scourtofChinaorHongKongcourt.

Chinahasnotenteredintoatreatyforthereciprocalrecognitionandenforcementofcourt

judgmentswiththeUnitedStates,theUnitedKingdom,Japanandmanyothercountries.In

adition,HongKonghasnoarangementwiththeUnitedStatesforeciprocalenforcementof

judgments.InacordancewiththeCivilProcedureLawofthePRC(《中华人民共和国民事诉讼

法》)andotheraplicablelaws,regulations,andinterpretations,acourtjudgmentobtainedinthe

UnitedStatesandanyoftheotherjurisdictionsmentionedabovemayberecognizedandenforced

inmainlandChinaorHongKonginconsiderationofthetreatiesprovidingforthereciprocal

enforcementofjudgmentsofcourtsbetwenChinandthecountrywherethejudgmentwasmade.

RISKFACTORS

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Certainforeignexchangetransactionsmaybesubjectoregulatoryrequirementsrelatingto

foreigncurencyconversion.

Conversionandremitanceoforeigncurenciesaresubjectotheforeignexchange

regulations.Itcanotbeguarantedthatunderacertainexchangerate,weshalhavesuficient

foreignexchangetometourforeignexchangeneds.Forexample,underthecurentChinese

foreignexchangecontrolsystem,foreignexchangetransactionsunderthecurentacount

conductedbyus,includingthepaymentofdividends,donotrequireadvanceaprovalfromthe

SAFE,butwearerequiredtopresentrelevantdocumentaryevidenceofsuchtransactionsand

conductsuchtransactionsatdesignatedforeignexchangebankswithinthePRCthathavethe

licensestocaryoutforeignexchangebusines.Foreignexchangetransactionsunderthecapital

acount,however,normalynedtobeaprovedbyoregisteredwiththeSAFEoritslocalbranch

unlesotherwisepermitedbylaw.Anyinsuficiencyoforeignexchangemayrestrictourability

tobtainsuficientforeignexchangefordividendpaymentstoshareholdersorsatisfyanyother

foreignexchangeobligation.IfwefailtobtainaprovalsfromtheSAFEtoconvertRMBinto

anyforeignexchangeforanyoftheabovepurposes,ourpotentialofshorecapitalexpenditure

plansandevenourbusinesmaybematerialyandadverselyafectedandcouldsubjectusto

administrativepenaltiesandfines.

Fluctuationsinexchangeratescouldresultinforeigncurencyexchangeloses.

ThexchangerateofRenminbiagainstheU.S.dolarandotherforeigncurenciesfluctuates

andisafectedby,amongotherthings,changesininternationalpoliticalandeconomiconditions,

aswelasuplyandemandinthelocalmarket.Thereisnoasurancethat,underacertain

exchangerate,wewilhavesuficientforeignexchangetometourforeignexchange

requirements.Itisdificultopredicthowmarketforcesorgovernmentpoliciesmayimpacthe

exchangeratebetwenRenminbiandtheHongKongdolar,U.S.dolarorothercurenciesinthe

future.

TheprocedsfromtheGlobalOferingwilbereceivedinHongKongdolars.Asaresult,

anyapreciationofRenminbiagainstheU.S.dolar,HongKongdolaroranyotherforeign

curencymayresultinadecreaseinthevalueofourprocedsfromtheGlobalOfering.

Conversely,anydepreciationoftheRenminbimayadverselyafecthevalueof,andanydividends

payableon,ourSharesinforeigncurency.Inadition,therearelimitedinstrumentsavailablefor

ustoreduceourforeigncurencyriskexposureatreasonablecosts.Anyofthesefactorscould

materialyandadverselyafectourbusines,financialcondition,resultsofoperationsand

prospects,andcouldreducethevalueof,andividendspayableon,ourSharesinforeigncurency

terms.

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Wemaybesubjectoaditionalregulatoryrequirementsrelatingtonewlawsand

regulationsinconectionwithoverseasecuritiesoferingandlistingisuedbyPRC

governmentauthorities.

OnFebruary17,2023,theCSRCisuedtheTrialMeasuresfortheAdministrationon

OverseasSecuritiesOferingandListingbyDomesticCompanies(《境内企业境外发行证券和上

市管理试行办法》)andfivesuportinguidelines,whichbecamefectiveonMarch31,2023(the

“OverseasListingRegulations”).TheOverseasListingRegulationsareaplicabletoverseas

securitiesoferingandlistingconductedbyisuerswhoare(i)companiesincorporatedinthePRC

(“PRCdomesticompanies”)and(i)companiesincorporatedoverseaswithsubstantial

operationsinthePRC.TheOverseasListingRegulationslayouthearangementsforegulatory

filingsforbothdirectandindirectoverseasoferings,andclarifythedeterminationcriteriafor

indirectoverseasoferingsinoverseasmarkets.Fordetails,se“RegulatoryOverview—Laws

andRegulationsRelatingtoSecuritiesandOverseasListings”inthisprospectus.TheOverseas

ListingRegulations,oranypertinentrulesoregulationspromulgatedinthefuture,maysubject

us,orourfinancingactivities,toaditionalcompliancerequirementsinthefuture.Anyfailureon

ourpartofulycomplywiththenewregulatoryrequirementsmaysignificantlylimitor

completelyhinderourfuturefinancingactivities.

Anyfailuretomakeadequatecontributionstovariousemployebenefitplansasrequiredby

PRCregulationsmaysubjectustopenalties.

CompaniesoperatinginthePRCarerequiredtoparticipateinvariousemployebenefit

plans,includingpensioninsurance,unemploymentinsurance,medicalinsurance,work-related

injuryinsurance,maternityinsuranceandhousingprovidentfundandcontributetotheamounts

equaltocertainpercentageofsalaries,includingbonusesandalowances,oftheiremployesupto

amaximumamountspecifiedbythelocalgovernmentfromtimetotimeatlocationswherethey

operatetheirbusines.

DuringtheTrackRecordPeriod,wedidnotmakefulcontributionstosocialinsuranceand

housingprovidentfundsforcertainofouremployesasrequiredbyrelevantPRClawsand

regulations.AsadvisedbyourPRCLegalAdvisor,acordingtotheSocialInsuranceLawofthe

PRC,wemaybeorderedtopayfortheshortfalswithinaprescribedtimeperiodalongwiththe

latepaymentfesandbeimposedofafineifsuchpaymentisnotmadewithintherequiredtime

period,themaximumpenaltyamountbeingthretimesofthecumulativeshortfalinoursocial

insurancecontribution.Inadition,acordingtotheRegulationsontheAdministrationofHousing

ProvidentFund,wemaybeorderedtopayfortheshortfalswithinaprescribedtimeperiod,ifthe

paymentisnotmadewithinsuchtimeperiod,anaplicationmaybemadetothecourtsinthe

Chinesemainlandforcompulsoryenforcement.Suchlegalconsequencemightadverselyafectour

busines,financialconditionandresultsofoperations.

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Inadition,asofDecember31,2022,2023,2024andMarch31,2025,wengaged

third-partyagenciestomakesocialinsuranceandhousingprovidentfundcontributionsforthre,

six,fiveandfivemployes,respectively,whichwasnotinstrictcompliancewithaplicablePRC

lawsandregulations.AsadvisedbyourPRCLegalAdvisor,ifthevalidityofsucharangementsis

chalengedbyrelevantcompetentauthorities,wemightbesubjectoaditionalcontributions,late

paymentfesand/orpenaltiesrequiredbyrelevantPRClawsandregulationsforfailingto

dischargeourobligationsinrelationtopaymentofsocialinsuranceandhousingprovidentfundsas

anemployerorbeorderedtorectifysuchpractice.

Ouroperationsaresubjecto,andmaybeafectedby,changesintaxlawsandregulationsin

thecountriesandregionswhereweoperate.

ThePRCEITLawimposesataxrateof25%onbusinesenterprises.Someofour

subsidiariesarentitledtopreferentialtaxtreatment.Se“FinancialInformation—Descriptionof

KeyComponentsofOurResultsofOperations—IncomeTaxCredit”inthisprospectus.Tothe

extenthereareanychangesinthelawsandregulationsgoverningpreferentialtaxtreatment,or

increasesinourefectivetaxrateduetoanyothereasons,ourtaxliabilitywouldincrease

corespondingly.Inadition,thePRCgovernmentmayamendorestateregulationsonincome,

witholding,value-aded,andothertaxes.Non-compliancewiththePRCtaxlawsandregulations

mayalsoresultinpenaltiesorfinesimposedbyrelevantaxauthorities.Adjustmentsorchangesto

PRCtaxlawsandregulationsandtaxpenaltiesorfinescouldafectourbusines,financial

conditionandresultsofoperations.

Wealsoperateincountriesandregionsoverseasandaresubjectovarioustaxes.Se

“FinancialInformation—DescriptionofKeyComponentsofOurResultsofOperations—

IncomeTaxCredit”inthisprospectus.Duetothefacthathetaxenvironmentcanbediferentin

diferentjurisdictionsandthatheregulationsregardingvarioustaxes,includingbutnotlimitedto

corporateincometax,arecomplex,ourinternationaloperationsmayexposeustorisksasociated

withtheoverseastaxpolicychanges.Dealingwithsuchregulatorycomplexitiesandchangesmay

requireustodivertmoremanagerialandfinancialresources,whichinturncouldafectouresults

ofoperations.

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RISKSRELATINGTOTHEGLOBALOFERING

WewilbeconcurentlysubjectoPRCandHongKonglistingandregulatoryrequirements.

AswearelistedontheSTARMarketandwilbelistedontheMainBoardoftheStock

Exchange,wewilberequiredtocomplywiththelistingrules(whereaplicable)andother

regulatoryregimesofbothjurisdictions,unlesotherwiseagredbytherelevantregulators.

Acordingly,wemayincuraditionalcostsandresourcesincomplyingwiththerequirementsof

bothjurisdictions.

OurASharesarelistedontheSTARMarket,andthecharacteristicsoftheAShareandH

Sharemarketsmaydifer.

OurASharesarelistedontheSTARMarket.FolowingtheGlobalOfering,ourAShares

wilcontinuetobetradedontheSTARMarketandourHShareswilbetradedontheStock

Exchange.UndercurentPRClawsandregulations,withoutheaprovalfromtherelevant

regulatoryauthorities,ourHSharesandASharesareneitherinterchangeablenorfungible.With

diferentradingcharacteristics,theHShareandASharemarketshavedivergentradingvolumes,

liquidityandinvestorbases,aswelasdiferentlevelsofretailandinstitutionalinvestor

participation.Asaresult,thetradingperformanceofourHSharesandASharesmaynotbe

comparable.Nonetheles,fluctuationsinthepriceofourASharesmayadverselyafectheprice

ofourHShares,andviceversa.Furthermore,duetothediferentcharacteristicsoftheHShare

andASharemarkets,thehistoricalpricesofourASharesmaynotbeindicativeofthe

performanceofourHShares.Youshouldthereforenotplaceunduerelianceonthetradinghistory

ofourAShareswhenevaluatingtheinvestmentdecisioninourHShares.

AnactivetradingmarketforourHSharesmaynotdeveloporbesustained.

PriortotheGlobalOfering,therewasnopublicmarketforourHShares.Wecanotasure

youthatapublicmarketforourHShareswithadequateliquiditywildevelopandbesustained

folowingthecompletionofGlobalOfering.TheinitialOferPriceforourHSharestothepublic

wilbetheresultofnegotiations,andtheOferPricemaydifersignificantlyfromthemarket

priceoftheHSharesfolowingtheGlobalOfering.

WehaveapliedtotheStockExchangeforthelistingof,andpermisiontodealin,theH

Shares(includinganyHShareswhichmaybeisuedpursuantothexerciseofthe

Over-alotmentOption).However,thelistingontheStockExchangedoesnotguarantethatan

activeandliquidtradingmarketfortheHShareswildevelop,orifitdoesdevelop,thatitwilbe

sustainedfolowingtheGlobalOfering,orthathemarketpriceoftheHShareswilnotdecline

RISKFACTORS

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folowingtheGlobalOfering.IfanactivepublicmarketforourHSharesdoesnotdevelop

folowingthecompletionoftheGlobalOfering,themarketpriceandliquidityofourHShares

couldbematerialyandadverselyafected.

OurControlingShareholdersGrouphasubstantialinfluenceoverourGroupandits

interestsmaynotbealignedwiththeinterestsofourotherShareholders.

OurControlingShareholdersGrouphasignificantinfluenceindeterminingtheoutcomeof

anycorporatetransactionorothermatersubmitedtotheShareholdersforaproval,includingbut

notlimitedtomergers,privatizations,consolidationsandthesaleofal,orsubstantialyal,ofour

asets,electionofdirectors,andothersignificantcorporateactions.Imediatelyfolowingthe

completionoftheGlobalOfering(asumingthatheOver-alotmentOptionisnotexercised),the

ControlingShareholdersGroupwilbetogetherentitledtocontrolthexerciseofaproximately

34.63%ofthevotingrightsandthusremainasagroupofControlingShareholdersofour

Company.TheinterestsofourControlingShareholdersGroupmightdiferfromtheinterestsof

ourotherShareholders.IntheventhatourControlingShareholdersGroupcausesustopursue

strategicobjectivesthatconflictwiththeinterestsofourotherShareholders,ourother

Shareholderscouldbedisadvantaged,andtheirinterestscouldbedamaged.Anyconflictofinterest

betwenourControlingShareholdersGroupandourotherShareholdersmayalsomaterialyand

adverselyafectheaspectsuchasthedecisionandimplementationofourbusinesplans,which

mayinturnafectouroperationsandprospects.

ThepriceandtradingvolumeofourHSharesmaybevolatile,whichcouldmaterialyand

adverselyafecthemarketpriceofourHShares.

ThepriceandtradingvolumeofourHSharesmaybesubjectosignificantvolatilityin

responsetovariousfactorsbeyondourcontrol,includingthegeneralmarketconditionsofthe

securitiesinHongKongandelsewhereintheworld.TheStockExchangeandothersecurities

marketshave,fromtimetotime,experiencedsignificantpriceandtradingvolumevolatilitythat

arenotrelatedtotheoperatingperformanceofanyparticularcompany.Thebusinesand

performanceandthemarketpriceofthesharesofothercompaniesengaginginsimilarbusines

mayalsoafecthepriceandtradingvolumeofourHShares.Inaditiontomarketandindustry

factors,thepriceandtradingvolumeofourHSharesmaybehighlyvolatileforspecificbusines

reasons,suchasfluctuationsinourevenue,earnings,cashflows,investments,expenditures,

regulatorydevelopments,relationshipswithoursupliers,movementsoractivitiesofkey

personel,oractionstakenbycompetitors.Moreover,sharesofothercompanieslistedonthe

StockExchangewithsignificantoperationsandasetsinthePRChavexperiencedpricevolatility

inthepast,anditisposiblethatourHSharesmaybesubjectochangesinpricenotdirectly

relatedtourperformance.

RISKFACTORS

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Wecanotasureyouwhen,whetherandinwhatformorsizewewilpaydividendsinthe

future.

Ourabilitytopaydividendswildependonwhetherweareabletogeneratesuficient

earnings.DistributionsofdividendshalbedecidedbyourBoardofDirectorsatheirdiscretion

andwilbesubjectotheaprovalofthegeneralmeting.Adecisiontodeclareortopay

dividendsandtheamounthereofdependonvariousfactors,includingbutnotlimitedtour

resultsofoperations,cashflowsandfinancialposition,operatingandcapitalexpenditure

requirements,distributableprofitsasdeterminedunderPRCGAPorIFRSs(whicheverislower),

ourArticlesofAsociationandotherconstitutionaldocuments,thePRCompanyLawandany

otheraplicablelawsandregulationsinChina,marketconditions,ourstrategyandprojectionfor

ourbusines,contractualrestrictionsandobligations,taxation,regulatoryrestrictionsandanyother

factorsfromtimetotimedemedbyourBoardofDirectorsasrelevantothedeclarationor

suspensionofdividends.Asaresult,therecanbenoasurancewhether,whenandinwhatform

wewilpaydividendsinthefuture.Subjectoanyoftheaboveconstraints,wemaynotbeableto

paydividendsinacordancewithourdividendpolicy.

ShouldtheOferPricebehigherthanthenetangiblebokvalueperShare,subjecto

pricing,youmayexperienceanimediatedilutioninthebokvalueoftheOferSharesyou

purchasedintheGlobalOferingandmayexperiencefurtherdilutionifweisueaditional

Sharesinthefuture.

TheOferPriceoftheOferSharesmaybehigherthanthenetangiblebokvalueperShare

imediatelypriortotheGlobalOfering.Asaresult,youandotherpurchasersoftheOferShares

intheGlobalOferingmayexperienceanimediatedilutioninproformanetangibleasetvalue.

Inordertoexpandourbusines,wemayconsideroferingandisuingaditionalSharesinthe

future.PurchasersoftheOferSharesmayexperiencedilutioninthenetangibleasetvalueper

shareoftheirSharesifweisueaditionalSharesinthefutureatapricewhichislowerthanthe

netangibleasetvalueperShareathatime.Furthermore,wemayisueSharespursuantoshare

incentiveschemes,whichwouldfurtherdiluteShareholders’interestsinourCompany.

Certainfacts,forecastsandstatisticscontainedinthisprospectusarederivedfrompublicly

availablesourcesandtheymaynotbereliable.

Certainfacts,forecastsandstatisticscontainedinthisprospectusarederivedfrompublicly

availablesources.Webelievethathesourcesofthisinformationareapropriatesourcesforsuch

informationandhavetakenreasonablecareinthereproductionorextractionofsuchinformation

forthepurposeofdisclosureinthisprospectus.Wehavenoreasontobelievethatsuch

informationisfalseormisleadingorthatanyfacthasbenomitedthatwouldrendersuch

informationfalseormisleading.However,theinformationfromoficialgovernmentsourceshas

RISKFACTORS

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notbenindependentlyverifiedbyus,theJointSponsors,theOveralCordinators,theJoint

GlobalCordinators,theJointBokruners,theJointLeadManagers,theUnderwriters,the

CapitalMarketIntermediariesoranyoftheirespectiveafiliatesoradvisorsand,therefore,we

makenorepresentationastotheacuracyofsuchfacts,forecastsandstatistics.Duetoposibly

flawedorinefectivecolectionmethodsordiscrepanciesbetwenpublishedinformationand

marketpractice,suchstatisticsinthisprospectusmaybeinacurateormaynotbecomparableto

statisticsproducedwithrespectothereconomies.Further,thereisnoasurancethatheyare

statedorcompiledonthesamebasisorwiththesamedegreofacuracyasimilarstatistics

presentedelsewhere.Inalcases,investorshouldgiveconsiderationastohowmuchweightor

importancetheyshouldatachtorplaceonsuchfacts,forecastsandstatistics.

Forward-lokingstatementscontainedinthisprospectusaresubjectorisksand

uncertainties.

Thisprospectuscontainscertainstatementsandinformationthatareforward-lokinganduses

forward-lokingterminologysuchas“believe,”“expect,”“estimate,”“predict,”“aim,”“intend,”

“wil,”“may,”“plan,”“consider,”“anticipate,”“sek,”“should,”“could,”“would,”“continue,”

andothersimilarexpresions.Youarecautionedthatrelianceonanyforward-lokingstatement

involvesrisksanduncertaintiesandthatanyoralofthoseasumptionscouldprovetobe

inacurateand,asaresult,theforward-lokingstatementsbasedonthoseasumptionscouldalso

beincorect.Inlightoftheseandotherisksanduncertainties,theinclusionoforward-loking

statementsinthisprospectushouldnotberegardedasrepresentationsorwarantiesbyusthatour

plansandobjectiveswilbeachievedandtheseforward-lokingstatementshouldbeconsidered

inlightofvariousimportantfactors,includingthosesetforthinthisection.Subjectothe

requirementsoftheListingRules,wedonotintendpubliclytoupdateorotherwiserevisethe

forward-lokingstatementsinthisprospectus,whetherasaresultofnewinformation,future

eventsorotherwise.Acordingly,youshouldnotplaceunduerelianceonanyforward-loking

information.Alforward-lokingstatementsinthisprospectusarequalifiedbyreferencetothis

cautionarystatement.

Youshouldnotplacerelianceonanyinformationreleasedbyusinconectionwiththelisting

ofourASharesontheSTARMarket.

AsourASharesarelistedontheSTARMarket,wehavebensubjectoperiodicreporting

andotherinformationdisclosurerequirementsinthePRC.Asaresult,fromtimetotimewe

publiclyreleaseinformationrelatingtourselvesontheSTARMarketorothermediaoutlets

designatedbytheCSRC.However,theinformationanouncedbyusinconectionwithourA

Sharesisbasedontheregulatoryrequirementsofthesecuritiesauthoritiesandmarketpracticesin

thePRCwhicharediferentfromthoseaplicabletourHShares.Suchinformationdoesnotand

wilnotformapartofthisprospectus.Asaresult,prospectiveinvestorsinourHSharesare

RISKFACTORS

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remindedthat,inmakingtheirinvestmentdecisionsastowhethertopurchaseourHShares,they

shouldrelyonlyonthefinancial,operatingandotherinformationincludedinthisprospectus.By

aplyingtopurchaseourHSharesintheGlobalOfering,youwilbedemedtohaveagredthat

youwilnotrelyonanyinformationotherthanthatcontainedinthisprospectusandanyformal

anouncementsmadebyusinHongKongwithrespectotheGlobalOfering.

Youshouldreadthentireprospectuscarefulyandonlyrelyontheinformationincludedin

thisprospectustomakeyourinvestmentdecision,andwestronglycautionyounotorelyon

anyinformationcontainedinpresarticlesorothermediacoveragerelatingtous,ourH

SharesortheGlobalOfering.

Therehasben,priortothepublicationofthisprospectus,andtheremaybe,subsequento

thedateofthisprospectusbutpriortothecompletionoftheGlobalOfering,presandmedia

coverageregardingusandtheGlobalOfering.Wehavenotauthorizedthedisclosureofany

informationconcerningtheGlobalOferinginthepresormedia.Wedonotaceptany

responsibilityfortheacuracyorcompletenesofanyinformationreportedbythepresorother

media,northefairnesorapropriatenesofanyforecasts,viewsoropinionsexpresedbythe

presorothermediaregardingourHShares,theGlobalOferingorus.Wemakenorepresentation

astotheapropriatenes,acuracy,completenesoreliabilityofanyoftheprojections,valuations

orotherforward-lokinginformationaboutus.Tothextentsuchstatementsareinconsistentwith,

orconflictwith,theinformationcontainedinthisprospectus,wedisclaimresponsibilityforthem.

Youshouldrelysolelyupontheinformationcontainedinthisprospectus,theGlobalOferingand

anyformalanouncementsmadebyusinHongKonginmakingyourinvestmentdecision

regardingourHShares.ByaplyingtopurchaseourHSharesintheGlobalOfering,youwilbe

demedtohaveagredthatyouwilnotrelyonanyinformationotherthanthatcontainedinthis

prospectusandanyformalanouncementsmadebyusinHongKongwithrespectotheGlobal

Ofering.

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InpreparationfortheGlobalOfering,wehavesoughthefolowingwaiversfromstrict

compliancewithcertainprovisionsoftheHongKongListingRules.

WAIVERINRESPECTOFMANAGEMENTPRESENCEINHONGKONG

PursuantoRules8.12and19A.15oftheHongKongListingRules,ourCompanymusthave

suficientmanagementpresenceinHongKong,whichnormalymeansthatatleastwoexecutive

DirectorsmustbeordinarilyresidentinHongKong.Giventhat(i)ourcorebusinesoperations

areprincipalylocated,managedandconductedinmainlandChinandourCompany’sheadofice

isituatedinmainlandChina;(i)ourexecutiveDirectorsandseniormanagementeamprincipaly

resideinmainlandChina;and(i)themanagementandoperationofourCompanyhavemainly

benunderthesupervisionofourexecutiveDirectorsandseniormanagement,whoareprincipaly

responsiblefortheoveralmanagement,corporatestrategy,planing,businesdevelopmentand

controloftheGroup’sbusinesesanditisimportantforthemtoremainincloseproximitytothe

Group’soperationlocatedinmainlandChina,ourCompanyconsidersthatitwouldbemore

practicalforitsexecutiveDirectorsandseniormanagementoremainordinarilyresidentin

mainlandChinawheretheGrouphasubstantialoperations.Fortheabovereasons,wedonot

have,andonotcontemplateintheforeseablefuturethatwewilhavesuficientmanagement

presenceinHongKongforthepurposeofsatisfyingtherequirementunderRules8.12and19A.15

oftheHongKongListingRules.

Acordingly,wehaveapliedtotheHongKongStockExchangefor,andtheHongKong

StockExchangehasgrantedus,awaiverfromstrictcompliancewithRules8.12and19A.15ofthe

HongKongListingRules.Wewilensurethathereareadequateandeficientarangementsto

achieveregularandefectivecomunicationbetwenusandtheHongKongStockExchangeas

welascompliancewiththeHongKongListingRulesbywayofthefolowingarangements:

1.Authorizedrepresentatives:wehaveapointedMr.Zong,ChairmanoftheBoard,

executiveDirectorandgeneralmanagerofourCompany,andMs.LeungSauFong

(“Ms.Leung”),oneofourjointcompanysecretaries,astheauthorizedrepresentatives

(the“AuthorizedRepresentatives”)forthepurposeofRule3.05oftheHongKong

ListingRules.TheAuthorizedRepresentativeswilactasourprincipalchanelof

comunicationwiththeHongKongStockExchangeandwouldbereadilycontactable

byphoneandemailtodealpromptlywithenquiriesfromtheHongKongStock

Exchange.Mr.ZongordinarilyresidesinmainlandChina,posesesvalidtravel

documents,andisabletorenewsuchtraveldocumentsbeforexpiryinordertovisit

HongKong.Ms.LeungordinarilyresidesinHongKong.Acordingly,theAuthorized

RepresentativeswilbeabletometwiththerelevantmembersoftheHongKongStock

WAIVERSFROMSTRICTCOMPLIANCEWITHTHELISTINGRULES

---

ExchangetodiscusanymatersinrelationtourCompanywithinareasonableperiod

oftime.Sethesectionheaded“CorporateInformation”inthisprospectusformore

informationaboutourAuthorizedRepresentatives.

2.Directors:tofacilitatecomunicationwiththeHongKongStockExchange,wehave

providedtheAuthorizedRepresentativesandtheHongKongStockExchangewiththe

contactdetailsofeachofourDirectors(i.e.mobilephonenumber,oficephonenumber,

emailadresandfaxnumber(asaplicable).IntheventhatanyDirectorexpectsto

travelorotherwisebeoutofofice,heorshewilprovidethephonenumberofthe

placeofhis/heracomodationtotheAuthorizedRepresentatives,sothathe

AuthorizedRepresentativeswouldbeabletocontactalourDirectorspromptlyatal

timesasandwhentheHongKongStockExchangewishestocontactourDirectorson

anymaters.Tothebestofourknowledgeandinformation,eachDirectorwhoisnot

ordinarilyresidentinHongKongposesesorcanaplyforvalidtraveldocumentsto

visitHongKongandcanmetwiththeHongKongStockExchangewithinareasonable

periodafterequestedbytheHongKongStockExchange.

3.Complianceadviser:wehaveapointedSomerleyCapitalLimitedasourCompliance

Adviser(the“ComplianceAdviser”)incompliancewithRule3A.19oftheHongKong

ListingRules.TheComplianceAdviserwil,amongotherthingsandinaditiontothe

AuthorizedRepresentatives,provideuswithprofesionaladviceoncontinuing

obligationsundertheHongKongListingRulesandactasaditionalchanelof

comunicationofourCompanywiththeHongKongStockExchangeduringtheperiod

fromtheListingDatetothedateonwhichourCompanycomplieswithRule13.46of

theHongKongListingRulesinrespectofitsfinancialresultsforthefirstfulfinancial

yearimediatelyaftertheListing.TheComplianceAdviserwilbeavailabletoanswer

enquiriesfromtheHongKongStockExchangeandwilactasanaditionalchanelof

comunicationwiththeHongKongStockExchangewhentheAuthorized

Representativesarenotavailable.

WAIVERINRESPECTOFJOINTCOMPANYSECRETARIES

Rule8.17oftheHongKongListingRulesprovidesthatourCompanymustapointa

companysecretarywhosatisfiestherequirementsunderRule3.28oftheHongKongListing

Rules.

AcordingtoRule3.28oftheHongKongListingRules,ourCompanymustapointan

individual,who,byvirtueofhis/heracademicorprofesionalqualificationsorelevant

experience,is,intheopinionoftheHongKongStockExchange,capableofdischargingthe

functionsofcompanysecretary.

WAIVERSFROMSTRICTCOMPLIANCEWITHTHELISTINGRULES

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PursuantoNote1toRule3.28oftheHongKongListingRules,theHongKongStock

Exchangeconsidersthefolowingacademicorprofesionalqualificationstobeaceptable:

(a)aMemberofTheHongKongCharteredGovernanceInstitute;

(b)asolicitororbarister(asdefinedintheLegalPractitionersOrdinance);and

(c)acertifiedpublicacountant(asdefinedintheProfesionalAcountantsOrdinance)

Inadition,pursuantoNote2toRule3.28oftheHongKongListingRules,inasesing

“relevantexperience,”theHongKongStockExchangewilconsidertheindividual’s:

(a)lengthofemploymentwiththeisuerandotherisuersandtherolestheyplayed;

(b)familiaritywiththeHongKongListingRulesandotherelevantlawsandregulations

includingtheSecuritiesandFuturesOrdinance,CompaniesOrdinance,Companies

(WindingUpandMiscelaneousProvisions)OrdinanceandtheTakeoversCode;

(c)relevantrainingtakenand/ortobetakeninaditiontotheminimumrequirementunder

Rule3.29oftheHongKongListingRules;and

(d)profesionalqualificationsinotherjurisdictions.

PursuantotheChapter3.10undertheGuideforNewListingAplicantspublishedbythe

HongKongStockExchange,thewaiverunderRule3.28oftheHongKongListingRuleswilbe

grantedforafixedperiodoftimebutinanyeventnotexcedingthreyearsfromthedateof

listing(the“WaiverPeriod”)andonthefolowingconditions:(i)therelevantcompanysecretary

mustbeasistedbyapersonwhoposesesthequalificationsorexperienceasrequiredunderRule

3.28oftheHongKongListingRulesandisapointedasajointcompanysecretarythroughouthe

WaiverPeriod;and(i)thewaivercanberevokedintheventofamaterialbreachoftheHong

KongListingRulesbyourCompany.

WehaveapointedMr.WangJunguo(“Mr.Wang”),asoneofthejointcompanysecretaries

ofourCompany.Se“Directors,SupervisorsandSeniorManagement—ExecutiveDirectors”in

thisprospectusforfurtherbiographicaldetailsofMr.Wang.

Mr.Wanghasextensivexperienceinfinancialmanagementbutpersonalydoesnotposes

anyofthequalificationsunderRules3.28and8.17oftheHongKongListingRules,andmaynot

beabletosolelyfulfiltherequirementsoftheHongKongListingRules.Therefore,ourCompany

hasapointedMs.Leung,amemberofHongKongInstituteofCharteredSecretaries,whofuly

WAIVERSFROMSTRICTCOMPLIANCEWITHTHELISTINGRULES

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metstherequirementsunderRules3.28and8.17oftheHongKongListingRulestoactasoneof

ourjointcompanysecretariesandtoprovideasistancetoMr.Wangforaninitialperiodofthre

yearsfromtheListingDatetoenableMr.Wangtoacquirethe“relevantexperience”underNote2

toRule3.28oftheHongKongListingRulesoastofulycomplywiththerequirementsetforth

underRules3.28and8.17oftheHongKongListingRules.Se“Directors,SupervisorsandSenior

Management—JointCompanySecretaries”inthisprospectusforfurtherbiographicaldetailsof

Ms.Leung.

Thefolowingarangementshaveben,orwilbe,putinplacetoasistMr.Wangin

acquiringthequalificationsandexperienceasthecompanysecretaryofourCompanyrequired

underRule3.28oftheHongKongListingRules:

(a)Mr.WangwilcomplywiththeanualprofesionaltrainingrequirementunderRule

3.29oftheHongKongListingRulesandatendrelevantrainingcourses,including

briefingsonthelatestchangestotherelevantaplicableHongKonglawsand

regulationsandtheHongKongListingRuleswhichwilbeorganizedbyour

Company’sHongKonglegaladvisersonaninvitationbasisandseminarsorganizedby

theHongKongStockExchangeforlistedisuersfromtimetotime;

(b)Ms.LeungwilasistMr.Wangtoenablehimtoacquiretherelevantexperience(as

requiredunderRule3.28oftheHongKongListingRules)todischargethedutiesand

responsibilitiesasthecompanysecretaryofourCompany;

(c)Ms.LeungwilcomunicateregularlywithMr.Wangonmatersrelatingtocorporate

governance,theHongKongListingRulesandanyotherlawsandregulationswhichare

relevantourCompanyanditsafairs.Ms.Leungwilworkcloselywith,andprovide

asistanceto,Mr.Wangindischarginghisdutiesasacompanysecretary,including

organizingourCompany’sBoardmetingsandgeneralmetings;and

(d)PriortoexpiryofMr.Wang’sinitialtermofapointmentasthecompanysecretaryof

ourCompany,wewilevaluatehisexperienceinordertodetermineifhehasacquired

thequalificationsrequiredunderRule3.28oftheHongKongListingRules,and

whetheron-goingasistanceshouldbearangedsothatMr.Wang’sapointmentasthe

companysecretaryofourCompanycontinuestosatisfytherequirementsunderRules

3.28and8.17oftheHongKongListingRules.

Acordingly,wehaveapliedtotheHongKongStockExchangefor,andtheHongKong

StockExchangehasgrantedus,awaiverfromstrictcompliancewithRules3.28and8.17ofthe

HongKongListingRules.Thewaiverwasgrantedforathre-yearperiodcomencingfromthe

ListingDate(the“WaiverPeriod”),ontheconditionthatMs.Leung,asajointcompanysecretary

WAIVERSFROMSTRICTCOMPLIANCEWITHTHELISTINGRULES

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ofourCompany,wilworkcloselywith,andprovideasistancetoMr.Wang,inthedischargeof

hisdutiesasajointcompanysecretaryduringtheWaiverPeriod.Suchwaiverwilberevoked

imediatelyifandwhen(i)Mr.Wangceasestobeasistedbyapersonwithqualificationsunder

Rule3.28and8.17oftheHongKongListingRules,or(i)iftherearematerialbreachesofthe

HongKongListingRulesbyus.Beforethendofthethre-yearperiod,theCompanywil

demonstratetotheStockExchangeandsektheStockExchange’sconfirmationthatMr.Wang,

havinghadthebenefitofMs.Leung’sasistanceduringtheWaiverPeriod,hasatainedthe

relevantexperienceandiscapableofdischargingthefunctionsofcompanysecretaryunderRule

3.28oftheListingRulesothatafurtherwaiverfromRules3.28and8.17oftheListingRules

wilnotbenecesary.

WAIVERSINRESPECTOFCONTINUINGCONECTEDTRANSACTION

WehaventeredintoandexpectocontinuetohaveonetransactionaftertheListingwhich

wilconstituteournon-exemptcontinuingconectedtransactionunderChapter14AoftheHong

KongListingRulesuponListing.Acordingly,wehaveapliedtotheHongKongStockExchange

for,andtheHongKongStockExchangehasgrantedusawaiverinrelationtosuchcontinuing

conectedtransactionbetwenusandourconectedpersonunderChapter14AoftheHongKong

ListingRules.Sethesectionheaded“ConectedTransactions—PartialyExemptContinuing

ConectedTransaction”inthisprospectus.

ALOCATIONOFHSHARESTOEXISTINGMINORITYSHAREHOLDERSANDTHEIR

CLOSEASOCIATES

Rule10.04oftheListingRulesrequiresthatapersonwhoisanexistingshareholderofthe

isuermayonlysubscribefororpurchaseanysecuritiesforwhichlistingisoughtwhichare

beingmarketedbyoronbehalfoftheisuereitherinhisoritsownameorthroughnominesif

theconditionsinRules10.03(1)and(2)oftheListingRulesarefulfiled.ItisprovidedinRule

10.03(1)oftheListingRulesthatnosecuritiesmaybeoferedtoexistingshareholdersona

preferentialbasisandnopreferentialtreatmentmaybegiventotheminthealocationofthe

securities;andinRule10.03(2)thatheminimumprescribedpercentageofpublicshareholders

requiredbyRule8.08(1)mustbeachieved.

Paragraph5(2)ofApendixF1totheListingRulesprovidesthatnoalocationswilbe

permitedtothexistingshareholdersoftheaplicantortheircloseasociates,whetherintheir

ownamesorthroughnomines,intheGlobalOferingunlestheconditionsetoutinRules

10.03and10.04oftheListingRulesarefulfiled.

WAIVERSFROMSTRICTCOMPLIANCEWITHTHELISTINGRULES

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Chapter4.15oftheGuideforNewListingAplicantsprovidesthatheStockExchangewil

considergivingconsentandgrantingwaiverfromRule10.04oftheListingRulestoanaplicant’s

existingshareholdersortheircloseasociatestoparticipateinaninitialpublicoferingifany

actualorperceivedpreferentialtreatmentarisingfromtheirabilitytoinfluencetheaplicant

duringthealocationprocescanbeadresed.

PriortotheListing,ourCompany’sharecapitalcomprisesentirelyAShareslistedonthe

STARMarket.WehavealargeandwidelydispersedpublicAShareshareholderbase.

WehaveapliedtotheStockExchangefor,andtheStockExchangehasgrantedtous,a

waiverfromstrictcompliancewiththerequirementsunderRule10.04andconsentunder

Paragraph5(2)ofApendixF1totheListingRulestopermitHSharesintheInternational

OferingtobeplacedtocertainexistingminorityShareholderswho(i)holdlesthan5%ofthe

totalnumberofASharesinisueofourCompanypriortothecompletionoftheGlobalOfering

and(i)arenotandwilnotbecome(uponthecompletionoftheGlobalOfering)coreconected

personsofourCompanyorthecloseasociatesofanysuchcoreconectedperson(together,the

“ExistingMinorityShareholders”),subjectotheconditionsasfolows:

(i)theJointSponsorsconfirmthateachExistingMinorityShareholdertowhomour

CompanymayalocatetheHSharesintheInternationalOferingholdslesthan5%of

thetotalnumberofASharesinisueofourCompanybeforeListing;

(i)theJointSponsorsconfirmthateachExistingMinorityShareholderisnot,andwilnot

be,acoreconectedpersonofourCompanyoranycloseasociateofanysuchcore

conectedpersonimediatelypriortorfolowingtheGlobalOfering;

(i)theJointSponsorsconfirmthatnoneoftheExistingMinorityShareholdershavethe

rightoapointaDirectorand/orhaveanyotherspecialrights;

(iv)theJointSponsorsconfirmthatalocationtotheExistingMinorityShareholdersortheir

closeasociateswilnotafectourabilitytosatisfythepublicfloatrequirementas

prescribedbytheStockExchangeunderRule8.08(asamendedandreplacedbyRule

19A.13A(2)oftheListingRulesorotherwiseaprovedbytheStockExchange;

(v)theJointSponsorsconfirmtotheStockExchangeinwritingthatbasedon(a)their

discusionswithourCompanyandtheOveralCordinators;and(b)theconfirmations

providedtotheStockExchangebyourCompanyandtheOveralCordinators

(confirmations(vi)and(vi)mentionedbelow),andtothebestoftheirknowledgeand

belief,theyhavenoreasontobelievethatanyoftheExistingMinorityShareholdersor

theircloseasociatesreceivedanypreferentialtreatment,orisinapositiontoexert

WAIVERSFROMSTRICTCOMPLIANCEWITHTHELISTINGRULES

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influenceontheCompanytobtainactualorperceivedpreferentialtreatmentinthe

alocationeitherasacornerstoneinvestororasaplacebyvirtueoftheirelationship

withourCompanyotherthanthepreferentialtreatmentofasuredentitlementundera

cornerstoneinvestmentfolowingtheprinciplesetoutinChapter4.15oftheGuidefor

NewListingAplicants,andetailsofthealocationtotheExistingMinority

Shareholdersholdingmorethan1%oftheisuedsharecapitaloftheCompany

imediatelypriortothecompletionoftheGlobalOferingwilbedisclosedinthis

prospectusand/orthealotmentresultsanouncement,asthecasemaybe;

(vi)ourCompanywilconfirmtotheStockExchangeinwritingthat:

(a)inthecaseofparticipationascornerstoneinvestors,nopreferentialtreatmenthas

ben,norwilbe,giventotheExistingMinorityShareholdersortheirclose

asociatesbyvirtueoftheirelationshipwithourCompany,otherthanthe

preferentialtreatmentofasuredentitlementunderacornerstoneinvestment

folowingtheprinciplesetoutinChapter4.15oftheGuideforNewListing

Aplicants,noristheExistingMinorityShareholderinapositiontoexert

influenceontheCompanytobtainactualorperceivedpreferentialtreatment,and

theExistingMinorityShareholdersortheircloseasociates’cornerstone

investmentagrementsdonotcontainanymaterialtermswhicharemorefavorable

totheExistingMinorityShareholdersortheircloseasociatesthanthoseinother

cornerstoneinvestmentagrements;or

(b)inthecaseofparticipationasplaces,nopreferentialtreatmenthasben,norwil

be,giventotheExistingMinorityShareholdersortheircloseasociates,noristhe

ExistingMinorityShareholderinapositiontoexertinfluenceontheCompanyto

obtainactualorperceivedpreferentialtreatment,byvirtueoftheirelationship

withourCompanyinanyalocationintheplacingtranche;

(vi)inthecaseofparticipationasplaces,theOveralCordinatorswilconfirmtothe

StockExchangethat,tothebestoftheirknowledgeandbelief,nopreferentialtreatment

hasben,norwilbe,giventotheExistingMinorityShareholdersortheirclose

asociatesbyvirtueoftheirelationshipwithourCompanyinanyalocationinthe

placingtranche.

WAIVERSFROMSTRICTCOMPLIANCEWITHTHELISTINGRULES

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DISCLOSUREOFOFERPRICE

Paragraph15(2)(c)ofApendixD1AtotheListingRulesprovidesthatheisuepriceor

oferpriceofeachsecuritymustbedisclosedintheprospectus.PursuantoParagraph12ofthe

Guide,theStockExchangealsoalowsanindicativeoferpricerangetobeincludedinthe

prospectus,asanalternativetothedisclosureofafixedoferprice.

WehaveapliedtotheStockExchangeawaiverfromstrictcompliancewithparagraph

15(2)(c)ofApendixD1AtotheListingRulesothatheCompanywilonlydisclosethe

maximumOferPriceinthisprospectusonthebelowbasis:

(a)TheOferPricewilbedeterminedwithreferenceto,amongotherfactors,theclosing

priceoftheCompany’sASharesontheShanghaiStockExchangeonthelastrading

dayonorbeforethePriceDeterminationDate.OurCompanyisunabletocontrolthe

tradingpriceofourASharesontheShanghaiStockExchange;

(b)Setingafixedoferpriceoranoferpricerangewithalow-endmayadverselyafect

ourabilitytopriceourHSharesinthebestinterestsofourShareholdersandthemarket

priceoftheASharesandtheHongKongOferShares;

(c)Pursuantoparagraphs9and10(b)oftheThirdScheduletotheCompanies(Winding

UpandMiscelaneousProvisions)Ordinance,theamountpayableonaplicationand

alotmentoneachshare,andthepricetobepaidforsharesubscribedfor,shalbe

specifiedintheprospectus,respectively.DisclosureofamaximumOferPricecomplies

withtherequirementsprescribedunderparagraphs9and10(b)ofPartAoftheThird

ScheduletotheCompanies(WindingUpandMiscelaneousProvisions)Ordinanceby

providingaclearindicationofthemaximumsubscriptionconsiderationapotential

investorshalpayfortheOferShares;and

(d)AmaximumOferPricewilbedisclosedinthisprospectus.Thisalternativedisclosure

aproachwouldnotprejudicetheinterestsoftheinvestingpublicinHongKong.

TheStockExchangehasgrantedtousawaiverfromstrictcompliancewithparagraph

15(2)(c)ofApendixD1AtotheListingRulesontheconditionsthathisprospectuswildisclose:

(a)themaximumOferPrice;

(b)thetimeforthedeterminationoftheOferPriceandtheformofitspublication;

WAIVERSFROMSTRICTCOMPLIANCEWITHTHELISTINGRULES

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(c)thehistoricalpricesoftheCompany’sASharesandtradingvolumeontheShanghai

StockExchangeduringtheTrackRecordPeriodanduptotheLatestPracticableDate;

(d)thedeterminantsofthefinalOferPrice;and

(e)thesourceforinvestortoacesthelatestmarketpriceoftheCompany’sAShares.

Se“StructureoftheGlobalOfering—PricingandAlocation—DeterminingthePricing

oftheOferShares”inthisprospectusforthehistoricalpricesofourASharesandtradingvolume

ontheShanghaiStockExchange.

WAIVERSFROMSTRICTCOMPLIANCEWITHTHELISTINGRULES

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DIRECTORS’RESPONSIBILITYFORTHECONTENTSOFTHISPROSPECTUS

Thisprospectus,forwhichourDirectorscolectivelyandindividualyaceptful

responsibility,includesparticularsgivenincompliancewiththeHongKongListingRules,the

Companies(WindingUpandMiscelaneousProvisions)OrdinanceandtheSecuritiesandFutures

(StockMarketListing)Rules(Chapter571VoftheLawsofHongKong)forthepurposeofgiving

informationwithregardtourGroup.OurDirectors,havingmadealreasonablenquiries,

confirmthatothebestoftheirknowledgeandbelief,theinformationcontainedinthisprospectus

isacurateandcompleteinalmaterialrespectsandnotmisleadingordeceptive,andthereareno

othermaterstheomisionofwhichwouldmakeanystatementhereinorthisprospectus

misleading.

RESTRICTIONSONOFERANDSALEOFHSHARES

EachpersonacquiringtheHongKongOferSharesundertheHongKongPublicOfering

wilberequiredto,orbedemedbyhisacquisitionofHongKongOferSharesto,confirmthathe

isawareoftherestrictionsontheoferandsaleoftheHongKongOferSharesdescribedinthis

prospectus.

NoactionhasbentakentopermitapublicoferingoftheHSharesorthedistributionof

thisprospectusinanyjurisdictionotherthanHongKong.Acordingly,andwithoutlimitationto

thefolowing,thisprospectusmaynotbeusedforthepurposeof,andoesnotconstitute,anofer

orinvitationinanyjurisdictionorinanycircumstancesinwhichsuchanoferorinvitationisnot

authorizedortoanypersontowhomitisunlawfultomakesuchanoferorinvitationfor

subscription.ThedistributionofthisprospectusandtheoferingandsaleoftheOferSharesin

otherjurisdictionsaresubjectorestrictionsandmaynotbemadexceptaspermitedunderthe

aplicablesecuritieslawsofsuchjurisdictionspursuantoregistrationwithorauthorizationbythe

relevantsecuritiesregulatoryauthoritiesoranexemptiontherefrom.Inparticular,theOferShares

havenotbenpubliclyoferedandsold,andwilnotbeoferedandsold,directlyorindirectly,in

mainlandChinaortheU.S.

CSRCFILING

OnJune12,2025,theCSRChasisuedanotificationonourCompany’completionofthe

PRCfilingproceduresforthelistingofourHSharesontheStockExchangeandtheGlobal

Ofering.AsadvisedbyourPRCLegalAdvisor,ourCompanyhascompletedalnecesaryfilings

withtheCSRCinthePRCinrelationtotheGlobalOferingandtheListing.

INFORMATIONABOUTHISPROSPECTUSANDTHEGLOBALOFERING

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INFORMATIONONTHEGLOBALOFERING

ThisprospectusispublishedsolelyinconectionwiththeHongKongPublicOfering.For

aplicationsundertheHongKongPublicOfering,thisprospectuscontainsthetermsand

conditionsoftheHongKongPublicOfering.TheGlobalOferingcomprisestheHongKong

PublicOferingofinitialy2,387,300OferSharesandtheInternationalOferingofinitialy

45,358,400OferShares(asumingtheOver-alotmentOptionisnotexercisedandsubject,in

each,torealocationonthebasisasetoutin“StructureoftheGlobalOfering”).

TheOferSharesareoferedsolelyonthebasisoftheinformationcontainedand

representationsmadeinthisprospectusandonthetermsandsubjectotheconditionsetout

hereinandtherein.NopersonisauthorizedtogiveanyinformationinconectionwiththeGlobal

Oferingortomakeanyrepresentationotcontainedinthisprospectus,andanyinformationor

representationotcontainedhereinmustnotberelieduponashavingbenauthorizedbyour

Company,theJointSponsors,theSponsor-OC,theOveralCordinators,theJointGlobal

Cordinators,theJointLeadManagers,theJointBokruners,theUnderwriters,theCapital

MarketIntermediaries,anyofourortheirafiliatesoranyoftheirespectivedirectors,oficers,

employes,advisers,agentsorepresentatives,oranyotherpersonsorpartiesinvolvedinthe

GlobalOfering.Neitherthedeliveryofthisprospectusnoranysubscriptionoracquisitionmade

underitshal,underanycircumstances,createanyimplicationthatherehasbenochangein

ourafairsincethedateofthisprospectusorthatheinformationinthisprospectusiscorectas

ofanysubsequentime.

UNDERWRITING

TheListingisponsoredbytheJointSponsorsandtheGlobalOferingismanagedbythe

Sponsor-OC.TheHongKongPublicOferingisfulyunderwritenbytheHongKong

UnderwritersubjectothetermsandconditionsoftheHongKongUnderwritingAgrementand

isubjectousandtheSponsor-OC(forthemselvesandonbehalfoftheUnderwriters)agreing

ontheOferPrice.TheInternationalOferingisexpectedtobefulyunderwritenbythe

InternationalUnderwriters,subjectothetermsandconditionsoftheInternationalUnderwriting

Agrement.Se“Underwriting”forfurtherdetailsontheUnderwritersandtheunderwriting

arangements.

APLICATIONFORLISTINGOFTHEHSHARESONTHEHONGKONGSTOCK

EXCHANGE

WehaveapliedtotheHongKongStockExchangeforthegrantingoflistingof,and

permisiontodealin,ourHSharestobeisuedpursuantotheGlobalOfering(includinganyH

ShareswhichmaybeisuedpursuantothexerciseoftheOver-alotmentOption).Dealingsin

INFORMATIONABOUTHISPROSPECTUSANDTHEGLOBALOFERING

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theHSharesontheHongKongStockExchangearexpectedtocomenceonTuesday,August

19,2025.ExceptforourASharesthathavebenlistedontheSTARMarketandourpending

aplicationtotheHongKongStockExchangeforthelistingof,andpermisiontodealin,theH

Shares,nopartofourshareordebtsecuritiesislistedonordealtinontheHongKongStock

Exchangeoranyotherstockexchangeandnosuchlistingorpermisiontolistisbeingor

proposedtobesoughtinthenearfuture.

Undersection44B(1)oftheCompanies(WindingUpandMiscelaneousProvisions)

Ordinance,anyalotmentmadeinrespectofanyaplicationwilbeinvalidifthelistingof,and

permisiontodealin,theHSharesontheHongKongStockExchangeisrefusedbeforethe

expirationofthreweksfromthedateoftheclosingoftheaplicationlists,orsuchlonger

period(notexcedingsixweks)asmay,withinthesaidthreweks,benotifiedtourCompany

byoronbehalfoftheHongKongStockExchange.

HSHARESWILBELIGIBLEFORADMISIONINTOCAS

Subjectothegrantingoflistingof,andpermisiontodealin,theHSharesontheHong

KongStockExchangeandourcompliancewiththestockadmisionrequirementsofHKSC,the

HShareswilbeaceptedaseligiblesecuritiesbyHKSCfordeposit,clearanceandsetlementin

CASwithefectfromthedateofcomencementofdealingsintheHSharesontheHongKong

StockExchangeoranyotherdateasdeterminedbyHKSC.Setlementoftransactionsbetwen

participantsoftheHongKongStockExchangeisrequiredtotakeplaceinCASonthesecond

setlementdayafteranytradingday.AlactivitiesunderCASaresubjectotheGeneralRules

ofHKSCandtheHKSCOperationalProceduresinefectfromtimetotime.Alnecesary

arangementshavebenmadefortheHSharestobeadmitedintoCAS.Investorshouldsek

theadviceoftheirstockbrokerorotherprofesionaladvisersforthedetailsofthesetlement

arangementsasucharangementsmayafectheirightsandinterests.

REGISTEROFMEMBERSANDSTAMPDUTY

AloftheHSharesisuedpursuantoaplicationsmadeintheGlobalOferingwilbe

registeredonourHShareregistertobemaintainedinHongKongbyourHShareRegistrar,

ComputershareHongKongInvestorServicesLimited.Ourprincipalregisterofmemberswilbe

maintainedbyusatourheadquartersinmainlandChina.

DealingsintheHSharesregisteredinourHShareRegisterwilbesubjectoHongKong

stampduty.

INFORMATIONABOUTHISPROSPECTUSANDTHEGLOBALOFERING

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DIVIDENDSPAYABLETOHOLDERSOFHSHARES

UnlesdeterminedotherwisebyourCompany,dividendspayableinHongKongdolarsin

respectofourHShareswilbepaidtotheshareholdersasrecordedontheHShareRegisterofour

CompanyinHongKongandsentbyordinarypost,atheshareholders’risk,totheregistered

adresofeachshareholderofourCompany.

PROFESIONALTAXADVICERECOMENDED

Youshouldconsultyourprofesionaladvisersifyouareinanydoubtastothetaxation

implicationsofsubscribingfor,purchasing,holding,disposalof,dealinginorthexerciseofany

rightsinrelationtourHShares.NoneofourCompany,theJointSponsors,theSponsor-OC,the

OveralCordinators,theJointGlobalCordinators,theJointBokruners,theJointLead

Managers,theUnderwriters,theCapitalMarketIntermediaries,anyofourortheirafiliatesorany

oftheirespectivedirectors,oficers,employes,advisers,agentsorepresentatives,oranyother

personsorpartiesinvolvedintheGlobalOferingaceptsresponsibilityforanytaxefectson,or

liabilitiesof,anypersonresultingfromthesubscription,purchase,holding,disposalof,dealingin,

orthexerciseofanyrightsinrelationto,ourHShares.

LANGUAGE

IfthereisanyinconsistencybetwenthisprospectusanditsChinesetranslation,this

prospectushalprevail.Foreaseofreference,thenamesoftheChineselawsandregulations,

governmentauthorities,institutions,naturalpersonsorotherentities(includingcertainofour

subsidiaries)havebenincludedinthisprospectusinboththeChineseandEnglishlanguages.In

theventofanyinconsistency,theChineseversionshalprevail.

ROUNDING

Certainamountsandpercentagefigures,suchasequityandoperatingdata,includedinthis

prospectusmayhavebensubjectoroundingadjustments.Acordingly,figureshownastotalsin

certaintablesmaynotbeanarithmeticagregationofthefiguresprecedingthem.

CURENCYTRANSLATIONS

Solelyforyourconvenience,thisprospectuscontainstranslationsamongcertainamounts

denominatedinRenminbi,HongKongdolarsandU.S.dolars.

INFORMATIONABOUTHISPROSPECTUSANDTHEGLOBALOFERING

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Unlesotherwisespecified,thisprospectuscontainscertaintranslationsforconvenience

purposesathefolowingrates:RenminbintoHongKongdolarsatherateofHK$1.00into

RMB0.9108,RenminbintoU.S.dolarsatherateofUS$1.00toRMB7.1496andHongKong

dolarsintoU.S.dolarsatherateofUS$1.00toHK$7.8499.

NorepresentationismadethatanyamountsinRMBorHongKongdolarscanbeorcould

havebenatherelevantdatesconvertedatheaboverateoranyotheratesoratal.

INFORMATIONABOUTHISPROSPECTUSANDTHEGLOBALOFERING

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ForfurtherinformationonourDirectorsandSupervisors,pleaserefertothesection

headed“Directors,SupervisorsandSeniorManagement”ofthisprospectus.

DIRECTORS

NameAdresNationality

ExecutiveDirectors

Mr.ZongYanmin

(宗艳民先生)

No.169,LingangMansion

Lane503,ZhubaiRoad

LingangSpecialArea

PudongNewArea

Shanghai,PRC

Chinese

Mr.GaoChao

(高超先生)

1-601,Building4

EvergrandeJadeResidence

HuaiyinDistrict,JinanCity

Shandong,PRC

Chinese

Mr.WangJunguo

(王俊国先生)

2-602,Building23

Zone7,ZhonghaiInternational

Comunity

No.66JiuquzhuangRoad

ShizhongDistrict,JinanCity

Shandong,PRC

Chinese

Non-executiveDirectors

Mr.QiuYufeng

(邱宇峰先生)

Rom401,Unit2,Building3

Meilunbao,KehuiRoad

ChaoyangDistrict

Beijing,PRC

Chinese

Ms.LiWanyue

(李婉越女士)

Rom2604,Unit2,Building37

Lot7,Xinxinyuan,HaidianDistrict

Beijing,PRC

Chinese

Mr.FangWei

(方伟先生)

Rom1301,No.1,Lane2088

WanhangduRoad

ChangningDistrict

Shanghai,PRC

Chinese

DIRECTORS,SUPERVISORSANDPARTIESINVOLVEDINTHEGLOBALOFERING

---

NameAdresNationality

Independentnon-executiveDirectors

Mr.LiHonghui

(李洪辉先生)

3-102,No.9,YuyuantanSouthRoad

HaidianDistrict

Beijing,PRC

Chinese

Ms.LiuHua

(刘华女士)

127-01,XisiZhuangyuanI

LichengDistrict,JinanCity

Shandong,PRC

Chinese

Mr.LaiKwokHung

Alex

(黎国鸿先生)

FlatC,19/F,Block2

TheBelcher’s

89PokFuLamRoad

Polfulam,HongKong

Chinese

(HongKong)

SUPERVISORS

NameAdresNationality

Ms.ZhangHongyan

(张红岩女士)

Rom504,Building16

LvdiXiangxieXinliSquare

HuaiyinDistrict,JinanCity

Shandong,PRC

Chinese

Mr.SongJian

(宋建先生)

14-2-1802,JishuiShangyuan

HuaiyinDistrict,JinanCity

ShandongPRC

Chinese

Mr.DouWentao

(窦文涛先生)

2-2-1503,Block9

HuangjinShanshuiJun

LixiaDistrict,JinanCity

Shandong,PRC

Chinese

DIRECTORS,SUPERVISORSANDPARTIESINVOLVEDINTHEGLOBALOFERING

---

PARTIESINVOLVEDINTHEGLOBALOFERING

JointSponsorsChinaInternationalCapitalCorporationHong

KongSecuritiesLimited

29/F,OneInternationalFinanceCentre

1HarbourViewStret

Central

HongKong

CITICSecurities(HongKong)Limited

18/F,OnePacificPlace

88Quensway

HongKong

Sponsor-OChinaInternationalCapitalCorporationHong

KongSecuritiesLimited

29/F,OneInternationalFinanceCentre

1HarbourViewStret

Central

HongKong

CLSALimited

18/F,OnePacificPlace

88Quensway

HongKong

OveralCordinatorsChinaInternationalCapitalCorporation

HongKongSecuritiesLimited

29/F,OneInternationalFinanceCentre

1HarbourViewStret

Central

HongKong

CLSALimited

18/F,OnePacificPlace

88Quensway

HongKong

DIRECTORS,SUPERVISORSANDPARTIESINVOLVEDINTHEGLOBALOFERING

---

HaitongInternationalSecuritiesCompany

Limited

22/F,LiPoChunChambers

189DesVoeuxRoadCentral

HongKong

BOCIAsiaLimited

26/F,BankofChinaTower

1GardenRoad

Central

HongKong

UOBKayHian(HongKong)Limited

6/F,HarcourtHouse

39GloucesterRoad

HongKong

JointGlobalCordinatorsChinaInternationalCapitalCorporation

HongKongSecuritiesLimited

29/F,OneInternationalFinanceCentre

1HarbourViewStret

Central

HongKong

CLSALimited

18/F,OnePacificPlace

88Quensway

HongKong

HaitongInternationalSecuritiesCompany

Limited

22/F,LiPoChunChambers

189DesVoeuxRoadCentral

HongKong

BOCIAsiaLimited

26/F,BankofChinaTower

1GardenRoad

Central

HongKong

DIRECTORS,SUPERVISORSANDPARTIESINVOLVEDINTHEGLOBALOFERING

---

UOBKayHian(HongKong)Limited

6/F,HarcourtHouse

39GloucesterRoad

HongKong

TheHongkongandShanghaiBanking

CorporationLimited

1Quen’sRoadCentral

HongKong

ZhongtaiInternationalSecuritiesLimited

19/F,LiPoChunChambers

189DesVoeuxRoadCentral

HongKong

JointBokrunersChinaInternationalCapitalCorporation

HongKongSecuritiesLimited

29/F,OneInternationalFinanceCentre

1HarbourViewStret

Central

HongKong

CLSALimited

18/F,OnePacificPlace

88Quensway

HongKong

HaitongInternationalSecuritiesCompany

Limited

22/F,LiPoChunChambers

189DesVoeuxRoadCentral

HongKong

BOCIAsiaLimited

26/F,BankofChinaTower

1GardenRoad

Central

HongKong

DIRECTORS,SUPERVISORSANDPARTIESINVOLVEDINTHEGLOBALOFERING

---

UOBKayHian(HongKong)Limited

6/F,HarcourtHouse

39GloucesterRoad

HongKong

TheHongkongandShanghaiBanking

CorporationLimited

1Quen’sRoadCentral

HongKong

ZhongtaiInternationalSecuritiesLimited

19/F,LiPoChunChambers

189DesVoeuxRoadCentral

HongKong

ICBCInternationalSecuritiesLimited

37/F,ICBCTower

3GardenRoad

HongKong

CMBInternationalCapitalLimited

45/F,ChampionTower

3GardenRoad

Central

HongKong

CBInternationalCapitalLimited

12/F,CBTower

3ConaughtRoadCentral

Central

HongKong

ABCICapitalLimited

11/F,AgriculturalBankofChinaTower

50ConaughtRoadCentral

Central

HongKong

DIRECTORS,SUPERVISORSANDPARTIESINVOLVEDINTHEGLOBALOFERING

---

GFSecurities(HongKong)BrokerageLimited

27/F,GFTower

81LockhartRoad

WanChai

HongKong

ChinaGalaxyInternationalSecurities(Hong

Kong)Co.,Limited

20/FWingOnCentre

111ConaughtRoadCentral

HongKong

ShenwanHongyuanSecurities(H.K.)Limited

Level6,ThrePacificPlace

1Quen’sRoadEast

HongKong

FutuSecuritiesInternational(HongKong)

Limited

34/F,UnitedCentre

No.95Quensway

Admiralty

HongKong

SunSecuritiesLimited

Rom2104,FarEastConsortiumBuilding

121DesVoeuxRoadCentral

HongKong

HuafuInternationalSecuritiesLimited

Unit2603−04,26/F,InfinitusPlaza

199DesVoeuxRoadCentralSheungWan

HongKong

FosunInternationalSecuritiesLimited

Suite2101−2105,21/F

ChampionTower

3GardenRoad

Central

HongKong

TigerBrokers(HK)GlobalLimited

23/F,LiPoChunChambers

189DesVoeuxRoadCentral

HongKong

DIRECTORS,SUPERVISORSANDPARTIESINVOLVEDINTHEGLOBALOFERING

---

JointLeadManagersChinaInternationalCapitalCorporation

HongKongSecuritiesLimited

29/F,OneInternationalFinanceCentre

1HarbourViewStret

Central

HongKong

CLSALimited

18/F,OnePacificPlace

88Quensway

HongKong

HaitongInternationalSecuritiesCompany

Limited

22/F,LiPoChunChambers

189DesVoeuxRoadCentral

HongKong

BOCIAsiaLimited

26/F,BankofChinaTower

1GardenRoad

Central

HongKong

UOBKayHian(HongKong)Limited

6/F,HarcourtHouse

39GloucesterRoad

HongKong

TheHongkongandShanghaiBanking

CorporationLimited

1Quen’sRoadCentral

HongKong

ZhongtaiInternationalSecuritiesLimited

19/F,LiPoChunChambers

189DesVoeuxRoadCentral

HongKong

ICBCInternationalSecuritiesLimited

37/F,ICBCTower

3GardenRoad

HongKong

DIRECTORS,SUPERVISORSANDPARTIESINVOLVEDINTHEGLOBALOFERING

---

CMBInternationalCapitalLimited

45/F,ChampionTower

3GardenRoad

Central

HongKong

CBInternationalCapitalLimited

12/F,CBTower

3ConaughtRoadCentral

Central

HongKong

ABCISecuritiesCompanyLimited

10/F,AgriculturalBankofChinaTower

50ConaughtRoadCentral

Central

HongKong

GFSecurities(HongKong)BrokerageLimited

27/F,GFTower

81LockhartRoad

WanChai

HongKong

ChinaGalaxyInternationalSecurities(Hong

Kong)Co.,Limited

20/FWingOnCentre

111ConaughtRoadCentral

HongKong

ShenwanHongyuanSecurities(H.K.)Limited

Level6,ThrePacificPlace

1Quen’sRoadEast

HongKong

FutuSecuritiesInternational(HongKong)

Limited

34/F,UnitedCentre

No.95Quensway

Admiralty

HongKong

DIRECTORS,SUPERVISORSANDPARTIESINVOLVEDINTHEGLOBALOFERING

---

SunSecuritiesLimited

Rom2104,FarEastConsortiumBuilding

121DesVoeuxRoadCentral

HongKong

HuafuInternationalSecuritiesLimited

Unit2603−04,26/F,InfinitusPlaza

199DesVoeuxRoadCentral

SheungWan

HongKong

FosunInternationalSecuritiesLimited

Suite2101−2105,21/F

ChampionTower

3GardenRoad

Central

HongKong

TigerBrokers(HK)GlobalLimited

23/F,LiPoChunChambers

189DesVoeuxRoadCentral

HongKong

CapitalMarketIntermediariesChinaInternationalCapitalCorporation

HongKongSecuritiesLimited

29/F,OneInternationalFinanceCentre

1HarbourViewStret

Central

HongKong

CLSALimited

18/F,OnePacificPlace

88Quensway

HongKong

HaitongInternationalSecuritiesCompany

Limited

22/F,LiPoChunChambers

189DesVoeuxRoadCentral

HongKong

DIRECTORS,SUPERVISORSANDPARTIESINVOLVEDINTHEGLOBALOFERING

---

BOCIAsiaLimited

26/F,BankofChinaTower

1GardenRoad

Central

HongKong

UOBKayHian(HongKong)Limited

6/F,HarcourtHouse

39GloucesterRoad

HongKong

TheHongkongandShanghaiBanking

CorporationLimited

1Quen’sRoadCentral

HongKong

ZhongtaiInternationalSecuritiesLimited

19/F,LiPoChunChambers

189DesVoeuxRoadCentral

HongKong

ICBCInternationalSecuritiesLimited

37/F,ICBCTower

3GardenRoad

HongKong

CMBInternationalCapitalLimited

45/F,ChampionTower

3GardenRoad

Central

HongKong

CBInternationalCapitalLimited

12/F,CBTower

3ConaughtRoadCentral

Central

HongKong

DIRECTORS,SUPERVISORSANDPARTIESINVOLVEDINTHEGLOBALOFERING

---

ABCICapitalLimited

11/F,AgriculturalBankofChinaTower

50ConaughtRoadCentral

Central

HongKong

ABCISecuritiesCompanyLimited

10/F,AgriculturalBankofChinaTower

50ConaughtRoadCentral

Central

HongKong

GFSecurities(HongKong)BrokerageLimited

27/F,GFTower

81LockhartRoad

WanChai

HongKong

ChinaGalaxyInternationalSecurities(Hong

Kong)Co.,Limited

20/FWingOnCentre

111ConaughtRoadCentral

HongKong

ShenwanHongyuanSecurities(H.K.)Limited

Level6,ThrePacificPlace

1Quen’sRoadEast

HongKong

FutuSecuritiesInternational(HongKong)

Limited

34/F,UnitedCentre

No.95Quensway

Admiralty

HongKong

DIRECTORS,SUPERVISORSANDPARTIESINVOLVEDINTHEGLOBALOFERING

---

SunSecuritiesLimited

Rom2104,FarEastConsortiumBuilding

121DesVoeuxRoadCentral

HongKong

HuafuInternationalSecuritiesLimited

Unit2603−04,26/F,InfinitusPlaza

199DesVoeuxRoadCentral

SheungWan

HongKong

FosunInternationalSecuritiesLimited

Suite2101−2105,21/F

ChampionTower

3GardenRoad

Central

HongKong

TigerBrokers(HK)GlobalLimited

23/F,LiPoChunChambers

189DesVoeuxRoadCentral

HongKong

LegalAdvisorstotheCompanyAstoHongKongandU.S.laws:

ClifordChance

27/F,JardineHouse

OneConaughtPlace

Central

HongKong

AstoPRClaw:

GrandalLawFirm(Shanghai)

25-28/F,SuheCentre

ChinaCentralPlace

99NorthShanxiRoad

Shanghai

PRC

DIRECTORS,SUPERVISORSANDPARTIESINVOLVEDINTHEGLOBALOFERING

---

AstoU.S.exportcontrolandsanctionslaw:

King&WodMalesons

10/F,BuildingB4,XinchenLingangCenter

Lane9,NorthYunjuanRoad,ShengangStret

PudongNewDistrict

Shanghai

PRC

LegalAdvisorstotheJointSponsors

andtheUnderwriters

AstoHongKongandU.S.laws:

Freshfields

55thFlor,OneIslandEast

TaikoPlace,QuaryBay

HongKong

AstoPRClaw:

Comerce&FinanceLawOfices

12-15/F,ChinaWorldOfice2

No.1JianguomenwaiAvenue

Beijing

PRC

AuditorandReportingAcountantBDOLimited

CertifiedPublicAcountants

25thFlor,WingOnCentre

111ConaughtRoadCentral

HongKong

IndustryConsultantFrost&Sulivan(Beijing)Inc.,

ShanghaiBranchCo.

Rom2504-2505

WhelockSquare

1717NanjingWestRoad

Shanghai,PRC

DIRECTORS,SUPERVISORSANDPARTIESINVOLVEDINTHEGLOBALOFERING

---

PropertyValuerAsia-PacificConsultingandApraisalLimited

Flat/RmA,12/F

KiuFuComercialBuilding

300LockhartRoad

WanChai

HongKong

ReceivingBanksCMBWingLungBankLimited

14/F,CMBWingLungBankBuilding

45DesVoeuxRoad

Central,HongKong

IndustrialandComercialBankofChina

(Asia)Limited

33/F,ICBCTOWER

No.3GardenRoad

Central,HongKong

DIRECTORS,SUPERVISORSANDPARTIESINVOLVEDINTHEGLOBALOFERING

---

RegisteredOfice,Headquartersand

PrincipalPlaceofBusinesin

thePRC

No.99,SouthTianyueRoad

HuaiyinDistrict,JinanCity

Shandong,PRC

PrincipalPlaceofBusinesin

HongKong

Rom503,5thFlor

TungWaiComercialBuilding

109−111GloucesterRoad

Wanchai,HongKong

Company’sWebsitew.sic.c

(Theinformationcontainedinthiswebsitedoesnot

formpartofthisprospectus)

JointCompanySecretariesMr.WangJunguo(王俊国)

No.99,SouthTianyueRoad

HuaiyinDistrict,JinanCity

Shandong,PRC

Ms.LeungSauFong(梁秀芳)

(ACGHKACG)

Unit1301,13/F

WingTuckComercialCentre

177-183WingLokStret

SheungWan

HongKong

AuthorizedRepresentativesMr.ZongYanmin(宗艳民)

No.169,LingangMansion

Lane503,ZhubaiRoad

LingangSpecialArea

PudongNewArea

Shanghai,PRC

Ms.LeungSauFong(梁秀芳)

(ACGHKACG)

Unit1301,13/F

WingTuckComercialCentre

177-183WingLokStret

SheungWan

HongKong

CORPORATEINFORMATION

---

StrategyComiteMr.ZongYanmin(宗艳民)(Chairperson)

Mr.QiuYufeng(邱宇峰)

Mr.LiHonghui(李洪辉)

AuditComiteMr.LiHonghui(李洪辉)(Chairperson)

Mr.LaiKwokHungAlex(黎国鸿)

Ms.LiuHua(刘华)

NominationComiteMs.LiuHua(刘华)(Chairperson)

Mr.ZongYanmin(宗艳民)

Mr.LaiKwokHungAlex(黎国鸿)

RemunerationandApraisal

Comite

Mr.LaiKwokHungAlex(黎国鸿)(Chairperson)

Mr.ZongYanmin(宗艳民)

Ms.LiuHua(刘华)

ComplianceAdvisorSomerleyCapitalLimited

20/F,ChinaBuilding

29Quen’sRoadCentral

HongKong

HShareRegistrarComputershareHongKongInvestorServices

Limited

Shops1712−1716,17thFlor

HopewelCentre

183Quen’sRoadEast

WanChai

HongKong

PrincipalBanksQiluBankCo.,Ltd.JinanHuaiyinSub-branch

No.28366,JingshiRoad

HuaiyinDistrict,JinanCity

Shandong,PRC

BankofBeijingCo.,Ltd.JinanBranch

No.11890,JingshiRoad

LixiaDistrict,JinanCity

Shandong,PRC

CORPORATEINFORMATION

---

Advantage Industrializa(cid:2)on Process
Applica(cid:2)on

(cid:129) Abundantandlow-cost,siliconisthemost widelyusedsemiconductor (cid:129) Enabled the shi(cid:3) from vacuum tubes to compactelectronics (cid:129) Elemental semiconductor manufacturing technologyismatureandclosetoop(cid:2)mal, but has reached the physical limit, performance enhancement space is narrowed,industrializa(cid:2)onisverymature

(cid:129) Enhancedthermalandelectronicproper(cid:2)es (cid:129) Improved electrical strength and radia(cid:2)on resistance (cid:129) Energy-efficientandeco-friendly (cid:129) Compactdevicesize (cid:129) Wide bandgap semiconductors are in the early stage of industrializa(cid:2)on, the produc(cid:2)on process is complex, there is s(cid:2)ll room for improvement, only a small number of companies with large-scale high-quality produc(cid:2)oncapacity

• Widelyusedininforma(cid:2)onprocessingand (cid:129) Inoptoelectronics,includingmillimeter-wave (cid:129) Inhigh-performancesensors automa(cid:2)on,includingconsumerelectronics, devices, satellite communica(cid:2)on, mobile (cid:129) Applica(cid:2)onsspan5G,IoT,electricvehicles, telecommunica(cid:2)ons,photovoltaics communica(cid:2)on,andGPSnaviga(cid:2)on optoelectronics,anddisplaytechnology

Theinformationandstatisticsetoutinthisectionandothersectionsofthisprospectus

werextractedfromtheF&SReport,whichwascomisionedbytheCompany,andfrom

variousoficialgovernmentpublicationsandavailableresourcesfrompublicmarketresearch.

TheCompanyengagedFrost&SulivantopreparetheF&SReportinconectionwiththe

GlobalOfering.Theinformationfromoficialgovernmentsourceshasnotbenindependently

verifiedbyanyoftheJointSponsors,theSponsor-OC,theOveralCordinators,theJoint

GlobalCordinators,theJointBokruners,theJointLeadManagers,theUnderwriters,anyof

theirespectivedirectorsandadvisers,oranyotherpersonsorpartiesinvolvedintheGlobal

Ofering(otherthanFrost&Sulivan),andnorepresentationisgivenastoitsacuracy.For

discusionofrisksrelatedtotheGroup’sindustry,se“RiskFactors—RisksRelatingtoOur

IndustryandBusines”inthisprospectus.

OVERVIEWOFTHEGLOBALSICMATERIALSANDAPLICATIONSMARKET

Energytransitionandartificialinteligence(AI)aretwocriticalenginesdrivingthefuture

technologyrevolution.Buildingaworldofgrowth,inovation,andsustainabilitystandsasthe

coreobjectiveoftheadvancementandintegratedevelopmentofenergytransitionandAI

technologies.SiliconCarbide(SiC)materialshavemergedasoneofthecornerstonesempowering

energytransitionandAItoachievetheircoredevelopmentgoals.

SiC,acompoundmaterialcomposedofcarbonandsiliconelements,featureshighardnes

andexcelentphysicalandchemicalproperties.Characterizedbyhigh-voltageresistance,

high-frequencyresistance,highthermalconductivity,high-temperaturestability,andahigh

refractiveindex,SiCmaterialserveascrucialmaterialsforcost-reductionand

eficiency-enhancementinumerousindustries.SiCmaterialstaketheleadinpromotingthe

transformationofthesemiconductorindustry,andarebeginingtoreplaceandcomplement

silicon-basedtechnologiesinmorefields.

ComparativeAnalysisofMajorSemiconductorMaterialsacrosDiferentGenerations

Firstgenera(cid:2)onsemiconductorThirdgenera(cid:2)onsemiconductorSecondgenera(cid:2)onsemiconductorSemiconductor

Material

Elementalsemiconductors:Silicon(Si),

germanium (Ge)

Compoundsemiconductors:Galium

Arsenide(GaAs),IndiumPhosphide

(InP)

Wide bandgap semiconductors:Silicon

Carbide(SiC),GaliumNitride(GaN)

INDUSTRYOVERVIEW

---

Comparedwithsilicon-basedsemiconductors,widebandgapsemiconductorsrepresentedby

SiC(SiC)andgaliumnitride(GaN)haveprominentperformanceadvantagesfromthematerialto

thedevicelevel.Theyfeaturehighfrequency,higheficiency,highpower,high-voltageresistance,

andhigh-temperatureresistance,andareanimportantdirectionforthefuturedevelopmentofthe

semiconductorindustry.Amongthem,SiCexhibitsuniquephysicalandchemicalproperties.

Characteristicsuchasitshighband-gapwidth,highbreakdownelectricfieldstrength,high

electronsaturatedriftvelocity,andhighthermalconductivitymakeitplayacrucialrolein

aplicationsuchaspower-electronicdevices.ThesepropertiesendowSiCwithsignificant

advantagesinhigh-performanceaplicationfieldsuchasxEVandphotovoltaics,especialyin

termsofstabilityandurability.

Thecurentsemiconductormaterialmarketisdominatedbyfirst-generationsilicon(Si),and

third-generationmaterialsuchasgaliumnitride(GaN)andsiliconcarbide(SiC).In2024,Si

acountsfor83.4%ofthemarket,SiCacountsforaround15.1%,andGaNacountsforaround

1.5%.

SiCandGaNaretwodistinctwidebandgapsemiconductormaterials,eachwithunique

characteristicsandadvantages,whichgeneralyprecludesimplesubstitutionbetwenthem.GaN

boastsfasterswitchingspedsandloweron-resistance,makingitparticularlyefectivein

high-frequencyandhigh-spedswitchingaplicationsuchaswirelespowertransferandradio

frequencyamplifiers.Ontheotherhand,SiCfeatureshigheroperatingvoltagesandsuperior

thermalconductivity,makingitwel-suitedforhigh-powerandhigh-temperatureaplicationslike

electricvehiclesandrenewablenergysystems.However,inaplicationswheremoderate

switchingpowerandfrequencyarerequired,SiCandGaNcanpotentialyreplaceachotheror

silicon,dependingonthespecificdemandsoftheaplication.

Galiumoxide(Ga2O3)isoneofthefourth-generationsemiconductormaterials.This

emergingsemiconductormaterialofershigherconductionandbreakdownfieldstrength,enabling

thecost-efectiveproductionoflarge,high-qualitycrystalswithighercrystalbritlenes,stronger

disintegrationproperties,andlowerfracturetoughnes.Despitetheseadvantages,thetechnologyis

stilinitsinfancy,withongoingresearchaimedatovercomingchalengesuchas

high-temperaturedecompositionandvolatilitytoproducelarge,defect-fregaliumoxidewafers

forindustrialaplications.

SiCmaterialshavebroadmarketaplicationpotentialinpowersemiconductordevices,

radio-frequencysemiconductordevices,andemergingaplicationfields

SiCmaterialsarecomonlyusedtoproduceSiCsubstratesorSiCepitaxialwafers.Among

them,SiCsubstratescanbewidelyapliedindownstreamproductsuchaspowersemiconductor

devices,radio-frequencysemiconductordevices,opticalwaveguides,TF-SAWfilters,and

heat-disipationcomponents.ThemainaplicationindustriesincludexEV,photovoltaicsand

INDUSTRYOVERVIEW

---

SiC-on-SiCpowersemiconductordevice
SiCSBD SiCMOSFET GaN-on-SiC RFsemiconductordevice HEMT MMIC

energystoragesystem,powergrid,railtransportation,telecomunications,AIglases,

smartphones,semiconductorlasers,etc.Thethird-generationsemiconductorsarepredominantly

utilizingSiCasthesubstratematerial,whichcanbecategorizedintoconductiveand

semi-insulatingtypesbasedonresistivity.Powerdevicesaremanufacturedbygrowing

homogeneousSiCepitaxialayersonconductivesubstrates,andtheseareprimarilyapliedin

areasuchasnewenergyvehiclesandphotovoltaicenergystorage.Onsemi-insulatingsubstrates,

heteroepitaxialGaNlayersaregrowntoproduceradiofrequency(RF)devices,whichare

predominantlyusedincomunicationsandradaraplications.Thetablebelowshowedthemain

aplicationofSiCsubstrate:

SubstrateEpitaxialWafer

SiC

Substrate

Conduc(cid:2)ve

substrate

Semi-insula(cid:2)ng

substrate

SiCepitaxial

wafer

GaNepitaxial

wafer

EpitaxialWaferDownstreamAplica(cid:2)ons

xEV

Photovoltaic

Energy Storage

Rail

Transporta(cid:2)onSmartGrid

satelite

radar

Telecom

Sta(cid:2)on

SiCPowerSemiconductorDevicesMarketAplicationAnalysis

Powersemiconductordevicesaresemiconductordevicesusedaswitchesorectifiersin

powerelectronicproducts.Powersemiconductordevicesmainlyincludepowerdiodes,power

transistors,thyristors,MOSFETs,IGBTs,etc.

From2020to2024,theSiCpowersemiconductordevicemarketwitnesedremarkable

growth.ThepenetrationrateofglobalSiCpowersemiconductordeviceoutofglobalpower

semiconductordevicemarketincreasedfrom1.4%to6.5%,andisexpectedtoreach22.6%in

2030.SuchgrowthisprimarilyatributedtotheincreasingadoptionofSiCdevicesacrosvarious

industries,particularlyinthexEVandphotovoltaicsectors.InthexEVsector,SiCpower

semiconductorsarepivotalinimprovingtheperformanceofelectricvehicles,includingextending

drivingrange,enablingfasterchargingspeds,andenhancingpowertraineficiency.Thetransition

torenewablenergysystems,suchasolarandwindpower,hasalsodrivendemandforSiC-based

componentsininvertersandgridinfrastructure.SiCsemiconductorsofersuperiorenergy

conversioneficiencyandreducesystemloses,makingthemidealforaplicationsuchasolar

inverters,windturbineconvertersandenergystoragesystems.Aditionaly,asthecostofSiC

powersemiconductordevicescontinuestodecline,theiradoptionisexpectedtoaceleratenot

onlyintraditionaldownstreamaplications,replacingconventionalpowerdevices,butalsoin

INDUSTRYOVERVIEW

---

emergingaplicationsuchashomeapliances,low-altitudeflightechnologies,andatacenters.

Thesefactorscolectivelyunderpintheanticipatedsignificantgrowthintheglobalpenetrationrate

ofsiliconcarbidepowersemiconductordevices.

Byaplicationarea,from2020to2024,theglobalrevenueofSiCpowersemiconductor

devicesusedinxEVhadacompoundanualgrowthrate(CAGR)ashighas65.1%.From2024to

2030,theCAGRinthexEVvehiclesectorwilstilbeashighas36.1%,continuingtoleadthe

growthoftheglobalSiCpowersemiconductordevicemarket.Thephotovoltaicenergystorage,

powergrid,andrailtransitsectorsalsoshowstrongrowthmomentum.TheCAGRsinthefuture

forecastperiodwilreach27.2%,24.5%,and25.3%respectively.Emergingaplicationareasof

SiCpowersemiconductordevicesuchashomeapliances,low-altitudeflight,andatacenters

wilexhibithefastestgrowthrate.TheglobalrevenueofSiCpowersemiconductordevices

apliedtotheseareasisexpectedtohaveaprojectedCAGRof39.2%.

MarketSizeofGlobalSiCPowerSemiconductorDevices

(byAplicationArea),bySalesRevenue

MilionUSD, 2020–2030E

*Note:ESforEnergyStorageSystem

Note:Emergingindustriesincludehomeapliances,low-altitudeflightsandatacenters

*Note: other industries include xEV charging,windenergy,UPS,oilandnaturalgas,etc.

1,055

1,279

1,922

2,310

2,916

4,022

5,859

8,992

11,720

14,690

2025E

2026E

2027E2020

1,535

2028E

2,088

2029E

2,667

2030E

1,794

2,746

3,240

4,050

5,548

8,004

12,151

15,796

1,107

19,745

xEv

Photovoltaic+ES*

Powergrid

Railtransportation

Emergingindustries

Other*

CAGR2020-20242024-2030E

Total49.8%35.2%

65.1%36.1%

39.0%27.2%

8.0%24.5%

12.9%25.3%

39.2%

34.7%38.5%

Penetrationrateof

globalSiCpower

semiconductordevices

outofglobalpower

semiconductor devices

1.4%2.4%3.7%5.8%6.5%7.6%9.5%12.5%17.1%20.1%22.6%

Source:Yole,F&S

INDUSTRYOVERVIEW

---

AplicationinxEVs

Range,chargingsped,andrivingexperiencearecrucialfactorsofxEVs.Comparedwith

traditionalsilicon-basedpowersemiconductordevicesuchasilicon-basedIGBTs,SiCpower

semiconductordeviceshavesignificantadvantagesuchaslowon-resistance,highswitching

frequency,higheatresistance,andhighthermalconductivity.Theseadvantagescanefectively

reducenergylosesinthepowerconversionproces,decreasethevolumeofpasivecomponents

likeinductorsandcapacitors,lowertheweightandcostofpowermodules,reducethenedfor

heatdisipationandsimplifythethermalmanagementsystem,andimprovethedynamicresponse

ofmotorcontrol.Asaresult,theyenhancetherange,chargingsped,andrivingexperienceof

xEVs.SiCpowersemiconductordevicescanbeapliedtovariouscomponentsinxEVs,including

motordrives,on-boardchargers(OBCs),DC/DCconverters,air-conditioningcompresors,

high-voltagePTCheaters,andpre-chargerelays.Curently,theyaremainlyusedinmotordrives,

OBCs,andDC/DCconverters,replacingtraditionalsilicon-basedIGBTpowermodules:Inmotor

drives,SiCpowermodulesreplacetraditionalsiliconIGBTs,reducingenergylosby70−90%,

increasingvehiclerangeby10%,andsuportinghigh-poweroutputinhigh-temperature

environments.InOBCwherethepowermoduleconvertsexternalalternatingcurentintodirect

curentochargethebatery,SiCpowermodulesreducecharginglosesby40%,enablingfaster

chargingandimprovinguserexperience.ForDC/DCconverterwhereitconvertsthedirectcurent

fromhigh-voltagebateryintolow-voltagedirectcurentforin-vehicledevicesuse,SiCpower

modulesbosteficiencybyreducingheatgenerationandenergylosby80-90%,minimizingthe

impactonvehiclerange.

ThemarketsizeofSiCpowersemiconductordevicesapliedinthexEVsectorisexpected

togrowfurther.Itispredictedthatby2030,theglobalsalesrevenueofSiCpowersemiconductor

devicesforxEVswilreachUSD14.7bilion,withaCAGRof36.1%from2024to2030.The

penetrationrateofSiCpowersemiconductordevicesintermsofrevenueinthenewenergy

vehiclesectorhasbenontherise.Itisexpectedtoincreasefrom19.2%in2024to53.6%in

2030.

DataCenters

SiCismainlyapliedtotheAC/DCstageoftherackpowersuplyinAIdatacenterpower

suplies.SiCMOSFETscanbeusedtoconstructhepower-factor-corection(PFC)circuitofthe

power-suplyunit(PSU)toreplacesilicon-basedMOSFETs.Comparedwithsilicon-based

MOSFETs,SiCMOSFETshaveahigherswitchingfrequencyandlowereverse-recoveryloses,

whichcanefectivelyreducethenumberofcomponents,increasethepowerdensityofthepower

suply,andimprovethenergy-conversioneficiencyoftheAC/DCstage.Thepowerdensityofa

PSUusingSiCMOSFETscanbemorethantwicethatofaPSUusingsilicon-basedpower

devices,andthepower-conversioneficiencycanbeincreasedbyuptoabout1%.

INDUSTRYOVERVIEW

---

Benefitingfromthedevelopmentoflargelanguagemodeltechnologyandtherapid

penetrationofgenerativeAI,theglobalAImarketsizeisgrowingrapidly.By2030,globaldata

centercapacityisexpectedtoreach299GW,anetincreaseof244GWfrom2023,ataCAGRof

27.4%.Thisgrowthwilsignificantlyincreasedatacenterpowerconsumptionfrom1.4%to10%

ofglobalelectricityusefrom2023to2030.Traditionalsilicon-basedpowersuplysystemsindata

centershaveaneficiencyofabout85%-88%,wasting12%-15%ofelectricityasheat.SiCpower

semiconductordevicescanhelpimprovenergyeficiency,reduceoperatingcosts,andsuport

sustainabledevelopmentstrategiesindatacenters.Aditionaly,theriseinAIworkloadshas

increasedthenumberofAIserversindatacenters,whichconsumesignificantlymorepowerthan

traditionalservers.Thishasledtoahigherpowerdensityrequirementforackpowersuplies,

makingSiCpowerdevicesaviablesolutionforincreasingpoweroutputwithinexistingrack

spaces.Itisexpectedthatfrom2025to2030,theglobalAIdata-centerscalewilincreaseby201

GW.Corespondingly,thepotentialmarketsizeofPSUsbasedonSiCpowerdevicesintheAI

data-centerfieldfrom2025to2030wilexcedRMB80bilion,thepenetrationrateofSiCinthe

AIdata-centerisexpectedtoreach18.3%in2030.

PhotovoltaicEnergyStorageAplications

SiCpowersemiconductordevicescanbeusedinphotovoltaicomponentsuchasinverters,

bostconverters,andenergystorageconverters,aswelasinenergystoragesystems.They

enhancephotovoltaicsystemsbyimprovingenergyconversioneficiency,reducingloses,and

minimizingthesizeandweightofcomponents,whichbroadenstheiraplication.Comparedwith

traditionalsilicon-basedevices,SiC-basedphotovoltaicinverterscanincreasetheconversion

eficiencyby1%−3%.Theirvolumeandweightcanusualybereducedby40%−60%,simplifying

instalationandcutingcost.Inthenergystoragesector,in2024,thenewlyinstaledcapacityof

globalnew-typenergystoragewasaproximately43.7GW,anincreaseof24.9%comparedtothe

previousyear.SiCcandrivethedevelopmentofenergystorageconverterstowardslarge-capacity

andmodulardirectionswhilesignificantlysimplifythedesignofenergystorageconverters.With

thereductioninthecostofSiCandtheimprovementofvarioustechnologiesinphotovoltaic

powergeneration,thecomprehensivecost-performanceratiofthesilicon-carbide-basedinverter

solutionwilbefurtherenhanced.ThepenetrationrateofSiCpowersemiconductordevicesin

termsofrevenueinthephotovoltaicenergystorageindustryisexpectedtogradualyincrease,

risingfrom9.7%in2024to20.4%in2030.

Ultra-fastChargers

Atpresent,DCfast-chargingtechnologyisakeystepinimprovingthenergy-replenishment

experienceofxEVs.AsthelectricalsystemsofxEVsaretransitioningfrom400Vto800V,the

powerlevelandpowerdensityofthepowermodulesofultra-fastchargersaregradualyincreasing

from20kW/30kWto40kW/50kWandabovetomethenedsofxEVswithighervoltages.Due

toitsexcelenthigh-voltageandhigh-temperatureresistanceproperties,SiC-basedmaterialshavea

INDUSTRYOVERVIEW

---

muchloweron-resistancethansilicon-basedmaterials,reducingconductionlosesandensuring

thatultra-fastchargerscanprovideahigherandwideroutputvoltagerangetocoverthebatery

nedsofvariousxEVmodels.Athesametime,thelow-junction-capacitancecharacteristicofSiC

semiconductormaterialsalowsforahigherswitchingfrequency,whichinultra-fastchargers

meansfasterchargingspedandhigherpowerdensity.Inadition,thehighthermalstabilityand

wideoperatingtemperaturerange(-55°Cto+175°C)ofSiCMOSFETsensurethestableoperation

ofultra-fastchargersundervariousclimaticonditions,metingthemarketdemandforeficient,

fast,andstablechargingsolutions.

PowerGridAplications

Renewablenergysourcesuchasolarandwindhavebenplayinganincreasingly

importantroleinglobalpowersystems.In2024,renewablenergycontributedover40%ofthe

globaltotalelectricitygeneration,andthishareisexpectedtorisefurtherinthefuture.The

powergrid,astheprimarycarierofelectricityproduction,transmision,consumption,and

utilization,facesgrowingdemandsforintegrationofdistributedrenewablenergyandenergy

storage.Asuch,thedevelopmentofsmartgridswithstrongerandmoreflexiblecapabilitiesin

regulation,control,androutingofpowerflowshasbecomeaninevitabletrend.SiCpower

semiconductordeviceshaveovercomethelimitationsofsilicon-basedpowersemiconductorsin

termsofhighvoltage,highpower,andhightemperature,therebyadresingsystemconstraints.

ThankstotheadvantagesofSiC,theaplicationofSiCpowersemiconductordevicescan

significantlyreducethenumberofcomponentsrequiredforpowerequipment,aswelasthe

equipment’size,weight,energylos,andsystemcomplexity.Italsoreducesthedemandfor

colingequipment,therebyloweringtheoveralconstructioncostofpowersystems.The

penetrationofSiCpowersemiconductordevicesinpowergridsisteadilyincreasing,anditis

expectedtogrowfrom4.2%in2024to14.6%in2030.

RailTransitAplications

Thehighcriticalfieldstrength,highcariersaturationvelocity,andhighthermalconductivity

ofSiChavenabledtheminiaturizationandlightweightdevelopmentofthetractionconversion

systeminrailtransit.Thisiscrucialformetingthegrenandenergy-savingrequirementsofrail

vehicleoperations.ByusingSiCpowersemiconductordevices,thepower-electronicdevicesof

railtransitvehiclescanbesignificantlyreducedinvolumeandweight,whichasapositive

impactonincreasingsped,aceleration,andextendingthemaintenancecycleandservicelife.At

thesametime,thehigh-eficiencyandhigh-power-densitycharacteristicsofthesedevicesalso

helptoreduceoperatingcostsandimprovenergyutilizationeficiency.Curently,SiChasben

maturelyapliedintherailtransitfield.OnJuly2020,ZhuhaiMetroLine1inChinadoptedSiC

powerdevices,whichledtoa50%reductioninequipmentvolume,a56%decreaseinweight,and

aneficiencyimprovementover95.5%.Samemonth,theN700StrainoftheTokaido

ShinkanseninJapanwasoficialyputintoperation.ThistrainadoptedhybridSiCmodules,

INDUSTRYOVERVIEW

---

whichreducedthesizeandweightofthetractioninverterby40%andecreasedlosesby35%.In

thefuture,thepenetrationrateofSiCpowersemiconductordevicesinrailtransitisexpectedto

increasefrom16.7%in2024to36.6%in2030.

HouseholdApliances

Inthefieldofhouseholdapliances,SiCSchotkybarierdiodes(SBDs)andSiCMOSFETs

canbeusedinpower-factor-corection(PFC)circuits,motordrives,bostcircuits,high-voltage

powersuplies,etc.,andaresuitableforhigh-powerhouseholdapliances.SiCpower

semiconductordevicescanimprovethenergy-conversioneficiencyofhouseholdapliances,

therebyenhancingenergy-eficiencyperformanceandprovidingconsumerswithmore

environmentalyfriendlyandeficienthouseholdapliancesproducts.Athesametime,SiCpower

semiconductordevicescanincreasethepowerdensityofhouseholdapliancespowersupliesand

reducethesizeofheatsinks,thusreducingthevolumeandcostofmagneticomponentsand

thermal-managementcomponentsandpromotingtheminiaturizationofhouseholdapliances

products.Takingairconditionersasanexample,tomethigherenergy-eficiencystandards,the

PFCfrequencyofvariable-frequencyairconditionersisconstantlyincreasing.Traditional

silicon-basedIGBTsandfast-recoverydiodes(FRDs)aregradualystruglingtomethe

requirementsofhighvoltage,highswitchingfrequency,andshortreverse-recoverytime.SiC

SBDshavebecomethefirstchoicetoreplacethesesilicon-basedpowerdevices.Airconditioning

isexpectedtobeamajorsectortoadoptSiCpowersemiconductordevices.In2030,thepotential

shipmentsofSiC-basedhigh-endhomeairconditionerscouldreachmorethan80milionunits,

whichacountforaproximately30%oftheglobalhomeairconditionershipmentsinthesame

year.Goingforward,itisposibleforSiCpowersemiconductordevicestobecomemore

afordableandtopenetrateintomasmarketofhomeairconditioners,whicholdsaproximately

70%ofthemarketshare.SiCpowersemiconductordeviceshavegreatgrowthpotentialinthe

globalhouseholdapliancesmarketandwilbemorewidelyapliedinthefutureinareasuchas

refrigerators,washingmachines,microwaveovens,inductioncokers,electricovens,ricecokers,

andtelevisions.

ElectricVerticalTake-ofandLanding(eVTOL)Aircraft

TheweightofthemotorisanimportantindicatorinthedesignrequirementsofeVTOL

aircraft,whichasahighdemandforthepowerdensityofmaterials.Thehigh-power-density,

high-temperature-resistant,andhigh-voltage-resistantcharacteristicsofSiCpowersemiconductor

devicescanmetherequirementsofeVTOLaircraftforthevoltageresistanceandoutputpower

ofelectricontrol,makingthemanidealchoiceforlow-altitudeaircraftandhelpingtoimprove

flightperformanceandsafety.Theglobalow-altitudeflighteconomymarketsizereached1.0

bilionUSDin2024andisexpectedtoreach19.6bilionUSDby2030.TheaplicationofSiC

powersemiconductordevicesintheVTOLaircraftfieldhasjuststarted.Withthegrowthofthe

low-altitudeflighteconomy,thepotentialofSiCinthisfieldishuge.

INDUSTRYOVERVIEW

---

MarketAplicationofSemi-insulatingSiliconCarbide-basedRFSemiconductorDevices

RFsemiconductordevicesplayacrucialroleinthewirelescomunicationfield.Theyare

mainlyresponsibleforsignalconversionandprocesingandareindispensablebasicomponentsof

wirelescomunicationdevices.Thesedevicesincludepoweramplifiers,filters,switches,

low-noiseamplifiers,anduplexers,whichjointlyensuretheperformanceandeficiencyof

comunicationsystems.Especialyinthefieldofcomercialmobilecomunication,galium

nitrideRFsemiconductordevicesbasedonsemi-insulatingSiCsubstratesexhibitsignificant

advantages.Withtheirhigh-power,high-eficiency,andhigh-frequencycharacteristics,these

devicesarewidelyusedinpoweramplifiersofcomunicationbasestations,significantly

improvingthequalityandcoverageofsignaltransmision.Inadition,withthepopularizationof

5GnetworksandthedevelopmentofInternetofThingstechnologies,galiumnitrideRF

semiconductordevicesplayakeyroleinincreasingdatatransmisionrates,reducingenergy

consumption,andsuportingtheconectionofmoredevices.

In2024,theglobalmarketsizeofsemi-insulatingsiliconcarbide-basedRFsemiconductor

devicesreached1.12bilionUSD.Inthenextfiveyears,drivenbythe5Gmarket,semi-insulating

siliconcarbide-basedRFsemiconductordeviceswilgradualycapturethemarketshareof

LDMOS,andtheglobalmarketforsemi-insulatingsiliconcarbide-basedRFsemiconductor

devicesisexpectedtoenterastageofaceleratedgrowth.By2030,themarketisexpectedto

reachapeakof3.2bilionUSD.During2024to2030,thecompoundanualgrowthrateofthe

marketisexpectedtoreach19.2%.Thisremarkablegrowthratereflectsthestrongrowthin

marketdemandforsemi-insulatingsiliconcarbide-basedRFsemiconductordevices.

MarketSizeofGlobalSemi-insulatingSiliconCarbide-basedRFsemiconductordevices,

byrevenue

Bilion USD,2020-2030E

CAGR2020-20242024-2030E

Total5.9%19.2%

202020212022202320242025E2026E2027E2028E2029E2030E

0.89

0.95

1.021.01

1.12

1.27

1.47

1.74

2.09

2.56

3.20

Source:Yole,F&S

INDUSTRYOVERVIEW

---

EmergingAplicationsofSiCinMoreIndustries

AIGlasesOpticalWaveguides

ForAIglases’opticalsystems,silicon-carbide-basedSRGwaveguidesarearevolutionary

inovation.Siliconcarbidehavetraitslikehighrefractiveindex,wideFOV,andful-color

integration.Notably,siliconcarbide’sexceptionalrefractiveindex(2.6−2.7)enablesingle-layer

integrationofRGBcolorchanels,efectivelyadresingrainbowefectsandsignificantly

reducingdeviceweight,thicknesandproductioncomplexitycomparedtoconventionalmulti-layer

solutions.ThisadvancementpositionsiliconcarbideSRGwaveguidesastheoptimalchoicefor

next-generationARdisplaysrequiringcompactformfactorsandimersivevisualexperiences.As

AIglasesevolveintomainstreamwearablecomputingplatforms,itisestimatedthatby2030,the

potentialmarketsizeofsilicon-carbide-basedSRGwaveguidesintheglobalAIglasesmarket

wilreachover60milionpieces.

TF-SAWHigh-endFilters

Thin-filmsurfaceacousticwave(TF-SAW)filtersrepresentasignificantechnological

advancementintheacousticfiltersector,oferinghighfrequency,highselectivity,andlow

insertionlos.TF-SAWfiltersbasedonpiezoelectriconinsulator(POI)substratesare

cost-efectiveandsimplertoproducethanbulkacousticwave(BAW)filters,makingthemideal

forsuportinghigherfrequencybandsinconsumerelectronicsand5Gaplications.Notably,

TF-SAWfiltersutilizingsiliconcarbidesubstratesexcelinhighfrequency,highQ-value,power

handling,andtemperaturestability.Theycansuportfrequencybandsabove3.3GHz,makingthem

suitableforhigh-endsmartphones,5Ginfrastructure,andAIoTdevices.Aswireles

comunicationtechnologyadvances,thedemandforthesefiltersisexpectedtogrowsubstantialy,

withthepotentialmarketsizeforsilicon-carbide-basedTF-SAWfiltersprojectedtoreachUSD5.2

bilionby2030.

HeatDisipationComponents

Duetoitshighthermalconductivity,lowcoeficientofthermalexpansion,highardnes,

chemicalstability,andlightweightcharacteristics,SiChasawiderangeofaplicationsinthe

fieldsofheatdisipationandheatsinks,includingsemiconductors,thermalmanagementsystems,

5Gcomunication,high-powerLEDlighting,electricvehicles,andrenewablenergysystems.

Thisimprovestheoperatingeficiencyandreliabilityofequipment,reducestheweightofthe

thermalmanagementsystem,andextendstheservicelifeofthequipment.Comparedwith

traditionalheat-disipationmaterialsuchascoperandaluminumnitride,thethermal

conductivityofSiCis1.2timesthatofcoperandmorethan2timesthatofaluminumnitride.

Therefore,SiCismoresuitableforscenarioswhererapidheatdisipationisrequiredtoprotect

sensitivelectronicomponentsortomaintainstableoperationinhigh-power-densitydevices.For

example,inhigh-powerlaseraplications,siliconcarbidecouldbeusedinthefabricationofheat

INDUSTRYOVERVIEW

---

xEV
Data Center

subs	trate

Photovoltaics+ Energy Storage System (ESS)
Power Supply
Rail
Emerging Industries

subs	trate

Epi-w	afer

sinks,whicharedesignedtotransferheatawayfromaheat-generatingobject,toreplaceother

conventionalmaterials.Itisestimatedthatin2030thetotalpotentialdemandsforheatsinksmade

ofsiliconcarbideinhigh-powerlaseraplicationscouldreachmorethan35milionpieces.

OVERVIEWOFTHEGLOBALSICSUBSTRATEMARKET

IntroductiontoSiCSubstratesandManufacturingProceses

ASiCsubstratereferstoasingle-piecematerialformedthroughmanufacturingproceses

suchascrystalgrowth,ingotprocesing,cuting,grinding,polishing,andcleaning,withSiC

powderasthemainrawmaterial.Itisthebasicmaterialforfabricatingwidebandgap

semiconductorsandotherSiC-basedevices.Theresearch,development,andmanufacturing

procesesofSiCsubstratesarehighlycomplex,involvingtheaplicationofinterdisciplinary

knowledgefromaterialscience,thermodynamics,semiconductorphysics,chemistry,computer

simulation,andmechanics.

SiCSemiconductorDeviceIndustryChain

SubstratemanufacturersareupstreamparticipantsinthentireSiCsemiconductordevice

industrychain.Thesesubstratemanufacturersareacrucialinkintheindustrychain,transforming

rawmaterialsintosubstrateproductsthatcanbeusedbydownstreamplayers.

Themid-andownstreamsegmentsincludedevicemanufacturers,foundrymanufacturers,and

end-aplications.Afterepitaxialgrowth,thesubstratesareusedtomanufacturevariouspower

devices,radio-frequencydevices,etc.Thesedevicesarewidelyapliedinfieldsuchasnew

energyvehicles,datacentersphotovoltaicsandenergystorage,powersuply,railtransit,and

emergingindustries.

SiCSemiconductorDeviceIndustryChain

Downstream

Aplica(cid:2)ons

Others

UpstreamMidstream

Raw Materials SupliersDevice Manufacturers

Substrate Providers

Epitaxial-wafer

Providers

Packaging &

Tes(cid:2)ng

ManufacturingDesign

Manufacturers

Device manufacturers have the op(cid:2)on to procure substrates and

conduct in-house epitaxy proceses or elect to acquire pre-fabricated

epitaxial wafers from external supliers

INDUSTRYOVERVIEW

---

Basedondiferencesinelectricalproperties,SiCsubstratesaredividedintoconductive

substratesandsemi-insulatingsubstrates.Conductivesubstrates,throughthehomo-epitaxy

proces,growanepitaxialayerwithcharacteristicsconsistentwiththoseofthesubstratematerial,

andaremainlyapliedtothemanufacturingofSiCpowersemiconductordevices.Semi-insulating

substrates,ontheonehand,canusehetero-epitaxytechnologytogrowagaliumnitridepitaxial

layerwithdiferentcharacteristicsfromthesubstratematerial,mainlyfortheproductionof

radio-frequency(RF)devices.

Whenclasifiedbysubstratediameter,SiCsubstratescanbedividedintoproductswith

diametersof2-inch,3-inch,4-inch,6-inch,8-inch,and12-inch.Theresearch,development,and

comercializationprogresofdiferent-sizedSiCsubstratesunderdiferentechnicalroutesvary.

ThetechnologicalprocesofSiCsubstratesincludestepsuchasrawmaterialsynthesis,

crystalgrowth,orientationandslicing,surfacegrindingandpolishing,chemicalmechanical

polishing(CMP),andinspectionandqualitycontrol.

ThepreparationofSiCsubstratesishighlycomplex,withthefolowingdificulties:

–Highdificultyingrowthproces:DefectcontrolduringthegrowthofSiCsingle

crystalsisextremelychalengingandconstitutesasignificantproductiondificulty.

First,therearediverseandintractabledefectypes.Second,SiChasacomplexcrystal

form,coveringmorethan200structures.Manyofthesecrystalformsareproneto

transformationduetosimilarformationenergiesinahigh-temperaturegrowth

environment,resultinginpolytypeinclusion,whichdisruptsthecrystalstructureand

seriouslyinterfereswithelectricalandopticalproperties.Third,thermalfieldfactors

leadtomanyproblems.Thetemperaturegradientinthethermalfieldcangenerate

thermalstres.Coupledwithfrequentfluctuationsintemperatureandcomponents

duringthegrowthproces,defectsuchasdislocationsarelikelytocur,layinghiden

dangersforsubsequentepitaxialgrowthandevicemanufacturing,andgreatlyafecting

productqualityandperformance.Overal,thesedificultiesareintertwined,and

producersmustadoptprecisemeasuresincomplextechnologicalprocesestoachieve

thestableproductionofhigh-qualitySiCsinglecrystals.

−Powdersynthesisdificulty:ThepreparationofSiCpowderfaceseveralchalenges.

Thesynthesisenvironmentexertsaninfluence,andtherawandauxiliarymaterials

containinherentandunremovableimpurities.Asaresult,thesynthesizedSiCpowder

unavoidablyhasalargenumberofimpuritiesintroduced.Theseimpuritiesdirectly

impacthepurityandelectricalperformanceofthecrystals,posingsignificant

dificultiesinthepreparationofhigh-qualitySiCpowder.

INDUSTRYOVERVIEW

---

–Highprocesingdificulty:Siliconcarbidesubstrates,asahigh-hardnesbritle

material,facechalengesuchascrackingduringprocesingandisueslikewarping

post-procesing.Tomethehighstandardsof“ready-to-use”requirementsfor

downstreamepitaxialproceses,ultra-precisionsurfaceprocesingisesentialto

significantlyreducesurfaceroughnesandimproveflatnes,whilestrictlycontroling

metalimpuritiesandparticlecontamination.Aditionaly,thehighardnesand

britlenesofSiCsubstratesmakecuting,grinding,andpolishingproceses

time-consumingandpronetochiping,furtherincreasingprocesingdificulty.These

factorscolectivelyhighlighthehightechnicalbariersandcomplexityinvolvedinthe

procesingofSiCsubstrates.

–Highdificultyindiameterexpansion:Large-sizedcrystalsrequireamoreuniform

temperaturedistributiontoavoidstresandefects.Thermalstresmanagement

becomesmorecomplex.Internalstrescausedbytemperaturegradientsandgrowthrate

diferencesmayleadtocrystalcracking.Rawmaterialconsumptionandcostsincrease

acordingly,asdiameterexpansionmeansmorehigh-purityrawmaterialsareneded.

Thecrystalgrowthrateslowsdown,increasingtheproductioncycleandcosts.Dueto

thecombinedefectsoftheabovefactors,thegrowthyieldofexpanded-diameter

crystalsisusualylow,afectingtheproduct’seconomiceficiencyandmarket

competitivenes.Thesechalengesnedtobeovercomethroughtechnological

inovationandprocesoptimizationtoachievethestableproductionoflarge-sized,

high-qualitySiCsubstrates.Curently,6-inchsiliconcarbidesubstrateshavebecomethe

mainstreaminthemarket,while8-inchsubstratesareinaphaseofrapidscaling.With

swiftechnologicaladvancements,theyarexpectedtofurtherdriveindustryupgrades

inthefuture.

–Dificultyinmaintainproductionconsistency:Thehighlycomplexpreparation

procesofSiCsubstratesmakesitdificultomaintainproductionqualityconsistency

duringlarge-scalemasproduction.ThequalityofthefinalSiCsubstrateisjointly

afectedbykeylinksuchasmaterialpurity,procescontrolcapabilities,equipment

acuracy,andinspectioncapabilities.Theinstabilityofanylinkwilafecthe

consistencyofthefinalproductquality.Substratemanufacturersusualynedtohavea

profoundunderstandingofprocestechnology,andbyestablishingafine-grained

productionprocesystem,introducingautomatedandinteligentequipment,and

implementingacompletequalityinspectionsystem,theycanultimatelyachieve

consistencyinproductproductionqualityduringlarge-scalemasproduction.

INDUSTRYOVERVIEW

---

50.1
8.4

33.1
6.6

22.7
5.3

16.3
4.1

12.0
3.3

8.7
2.6

5.4
2.0

6.6
2.2

3.4

GlobalSiCSubstrateMarketSize

Intermsofsalesrevenue,theglobalsiliconcarbidesubstratemarkethasgrownfrom

RMB3.0bilionin2020toRMB8.8bilionin2024,withacompoundanualgrowthrateof

29.9%.Itisexpectedthatby2030,themarketsizeislikelytoincreasetoRMB58.5bilion,witha

compoundanualgrowthrateof37.1%.

GlobalSiCSubstrateMarketSize,bySalesRevenue

bilion RMB, 2020-2030E

CAGR2020-20242024-2030E

Total

29.9%37.1%

38.5%40.1%

14.1%25.0%

1.3

1.5

1.7

1.8

2.4

2.0

2.2

20242025E2026E2027E2028E2029E2030E

3.0

3.8

5.1

7.4

8.8

11.3

15.3

20.4

27.9

39.7

58.5

Conduc(cid:2)ve silicon carbide substrate

Semi-insula(cid:2)ng silicon carbide substrate

(Note: The market size only includes products for external sales, and data of self-produced and self-used

products are not included.)

Source:Yole,Frost&Sulivan

(Note:Themarketsizeonlyincludesproductsforexternalsales,andataofself-producedandself-usedproductsare

notincluded.)

INDUSTRYOVERVIEW

---

KeyDriversoftheGlobalSiCSubstrateMarket

–GlobalEnergyTransitionPropelstheDevelopmentoftheSiCIndustry.Forenergy

suply,energytransitionemphasizesreducingrelianceonfosilfuelsandevelopingclean

andrenewablenergysourceslikesolarandwindenergy.From2020to2024,theproportion

ofglobalelectricityconsumptionintotalglobalenergyconsumptionincreasedfrom19.8%to

over20%.Theincreaseinthetotalamountofelectricityconsumptionmakestheconversion

eficiencyofelectricityparticularlycrucial.ThankstotheadvantagesofSiCmaterials,such

ashighfrequency,lowlos,high-voltageresistance,andhigh-temperatureresistance,SiC

powersemiconductordevicescanenhancetheconversioneficiencyofelectricityinthe

generationandconsumption,achieveasmalersystemsizeandhigherpowerdensity,and

alsolesdemandforcolingsystems.Theyhavebecomethe“energyeficiencymultipliers”

infieldsuchasxEVs,photovoltaicandenergystoragesystem,powersuply,andata

centers,drivingthenergysystemtotransitiontowardslow-carbonization.

–GrowthandInovationofAIndustriesCreateMoreIncrementalOportunitiesfor

SiC.Curently,AIisbeingintegratedintovariousaspectsofindustriesandpeople’sdaily

lives,exertingaprofoundimpactonhumandevelopment.Withtheadvancementoflarge

languagemodeltechnology,generativeAIhastrongereasoningandinteligentcapabilities,

furtheraceleratingtherapidpenetrationofAI.Asanimportantinfrastructuresuportingthe

developmentofAI,datacentersarexpectedtoacountfor10%ofglobalpower

consumptionby2030.Comparedwithtraditionalsilicon-basedpowersemiconductordevices,

siliconcarbide-basedpowersemiconductordevicescanprovidehigherpowerconversion

eficiencyandhigherpowerdensity.Theaplicationofsiliconcarbide-basedpower

semiconductordevicesindatacentersisaninevitablechoicetoaleviatetheglobalpower

suplychalengesforAIandachievethelow-carbonizationofdatacenters.Moreover,the

developmentofAItechnologycontinuouslygivesrisetoinovationsinAI-enabledsmart

products,whichinturncreateaplicationoportunitiesfornewmaterialsrepresentedbySiC.

Forexample,theaplicationofsilicon-carbide-basedopticalwaveguidesinAIglasescan

achievealargerfieldofviewandasimplerstructuredful-colordisplay.Thiscanreducethe

size,weight,manufacturingcost,andcomplexityofAIglases,andsignificantlyenhancethe

userexperience.

–HigherRequirementsforPerformance,Eficiency,andStabilityDrivetheGrowthofthe

SiCPowerSemiconductorDeviceMarket.From2020to2024,theglobalmarketsizeof

theSiCpowersemiconductordeviceindustryincreasedsignificantly,from$644milionto

$3.2bilion,withaCAGRof49.8%.Thisgrowthtrendnotonlyreflectsthestrongdemand

intheSiCpowersemiconductordevicemarketbutalsodirectlydrivesthegrowthofthe

demandforSiCsubstrates.WiththewidespreadaplicationofSiCpowersemiconductor

devicesinstrategicemergingindustriesuchasxEVs,photovoltaicandwindenergy,and5G

comunication,thesubstrate,asakeymaterialforproducingSiCdevices,hasenan

INDUSTRYOVERVIEW

---

expansioninmarketdemand.Itisexpectedthatfrom2024to2030,themarketsizeofthe

SiCpowerdeviceindustrywilcontinuetogrow,withacompoundanualgrowthrateof

35.2%.By2030,themarketsizeisexpectedtoreachaproximately$19.7bilion.Theglobal

penetrationrateofSiCinthentirepowersemiconductordevicemarkethasalsoincreased

significantly,from1.4%in2020to6.5%in2024,andisexpectedtoincreaseto22.6%by

2030.

–TechnologicalAdvancementsImproveProductionEficiency,ReduceProductionCosts,

andEnhanceEconomyandPenetrationRate.Technologicalprogresincrystalgrowth,

slicing,andgrindingandpolishingproceseshasignificantlyimprovedtheproduction

eficiencyofSiCsubstratesandreducedproductioncosts.Forexample,advancementsin

crystalgrowthtechnologyhavenabledthemasproductionof8-inchconductivesubstrates.

Thelargeravailablesubstrateareahasreducedtheunitcomprehensivecostby50%and

increasedthesubstrateproductionyield,furtherdrivingdowntheunitcostofsubstrates.

Withcontinuoustechnologicalprogresandcapacityexpansion,thecostofSiCsubstratesis

expectedtodeclinefurther,andtheireconomyandmarketpenetrationratewilcontinueto

increase.

KeyTrendsoftheGlobalSiCSubstrateMarket

–AceleratedPenetrationinExistingFieldsandExpansionintoEmergingAplication

Areas:SiCsubstrateshavewitnesedrapidevelopmentinrecentyears,withtheir

aplicationscopecontinuouslyexpanding.ThepenetrationrateofSiCpowersemiconductor

devicesinthexEVsfieldwas19.2%in2024andisexpectedtoreach53.6%by2030.Inthe

photovoltaicenergystoragefield,themarketpenetrationrateofSiCisexpectedtoincrease

from9.7%in2024to20.4%in2030.Intheopticalwaveguidefield,SiCcanbeusedinAI

glasestoachievealowerefractiveindexandlighterweight.Itisexpectedthatinthe

future,withtheincreaseintheshipmentvolumeofAIglases,theshipmentvolumeofSiCin

thisfieldwilalsorise.Withthevigorousdevelopmentof5G,thedemandforSiCinthe

filterfieldhasincreasedsharply.Thehigh-frequencyandhigh-spedcharacteristicsof5G

requirefilterstohavelowlosandhighstability,whichSiCsubstratescanpreciselymet.

Therefore,intheconstructionofadvancedcomunicationbasestationsinthefuture,its

penetrationratewilclimbyearbyear.Itspenetrationrateinadvancedcomunicationbase

stationsincreasedfrom36%in2019to50%in2024andisexpectedtoincreaseto66%by

2030.Athesametime,theimprovementofelectronicdeviceperformancebringsheat

disipationpresure.SiC,withitshighthermalconductivityandhigh-temperatureresistance,

standsoutinthehigh-endheat-disipationmaterialmarket,anditsmarketsharewilcontinue

togrow.Evidently,SiCsubstratematerialshavegreatpotentialinbothexistingandemerging

fields.Inthefuture,theywilplayakeyroleinthetransformationofthetechnology

industry,helpingmultipleindustriesbreakthroughtechnicalbotlenecksandpromotingthe

globaltechnologyindustrytoanewheight.

INDUSTRYOVERVIEW

---

–Thesubstratesarevolvingtowardslargersizes.Curently,6-inchconductivesubstrates

remainthemainstream,whilethe8-inchconductivesubstratesarestartingtogain

momentum,andtherearealreadyR&Dsamplesof12-inchconductivesubstrates.At

present,theSiCsubstrateindustryisatacrucialdevelopmentstageofsizeupgrading.

Although6-inchconductivesubstratesarestildominantinthemarket,themarketdemand

for8-inchconductivesubstratesisgradualyrising.Thedemandforhigh-performanceSiC

powersemiconductorsfromdownstreamindustries,suchasxEVandPhotovoltaicandES,

wilcontinuouslydrivethemarketdemandforSiCsubstrates.Morespecificaly,withthe

advancementoftechnologyandthegrowthofmarketdemand,8-inchSiCsubstrates

gradualybecomethenewfocusoftheindustryduetoitshigheroutputrates,reducededge

los,andimprovedeviceperformancereplacing4-inchand6-inchSiCsubstrates.The

outputofsingle-chipchipsonan8-inchsubstrateisaproximatelytwicethatofa6-inch

substrateandfourtimesthatofa4-inchsubstrate.Moreover,8-inchsubstratescanmake

partialuseoftheproductionlinequipmentofsilicon-basedpowerchips,whichcan

efectivelyreducecostsandimproveproductioneficiency.Enterprisesthataketheleadin

achievingR&Dbreakthroughsin8-inchSiCsubstrateswilentertheverificationprocesof

downstreamdevicemanufacturersearlier.Theverificationperiodfortheirelectrical

performancegeneralylasts6to12months.Oncetheverificationisucesful,downstream

devicemanufacturerswilnoteasilychangesubstratesupliers.Basedontheseadvantages,

globalsubstratemanufacturersarevigorouslyinvestingintheconstructionof8-inch

conductivesubstrateproductionlines.StatisticshowthathetotalinvestmentofglobalSiC

powersemiconductordevicemanufacturersin8-inchprojectshasexcededRMB175.4

bilion.Amongthem,thetotalinvestmentofthetopfiveSiCpowerdevicemanufacturershas

excededRMB126.9bilion,acountingformorethan72%.Athesametime,manufacturers

intheindustryareconstantlyexploringsubstratesoflargersizes.Curently,thereareR&D

samplesof12-inchconductiveSiCsubstrates.The12-inchsubstratescanfurtherenhance

economicbenefits,createmoreposibilitiesforthelarge-scaleaplicationofSiCmaterials,

andrepresenthefuturedevelopmentdirectionandindustrializationtrendofSiCsubstrate

technology.

INDUSTRYOVERVIEW

---

–DecreaseinUnitProductionCostsandEmergenceofEconomiesofScale,Promotingthe

AdoptionofSiCSubstratesinMoreDownstreamScenarios:ThepriceofSiCsubstrates

wilcontinuetodeclineinthefuture,mainlydrivenbytwofactors.First,thereductionin

unitdiecostbroughtaboutbyongoingimprovementsandadvancementsinbothtechnology

andproceses.AstheyieldinlinksuchasSiCcrystalgrowthimprovesandthesubstrate

sizexpands,theunitcostofeachdevicewilcontinuetodecrease.Second,economiesof

scale.WiththecapacityexpansionofleadingSiCsubstratemanufacturersglobaly,especialy

inChina,theseleadingmanufacturersdemonstratesignificanteconomiesofscaleinaspects

suchascost-sharing,productionautomationandprocesoptimization,suplychain

procurement,andtechnologyacumulation,thusdrivingdownthepriceofsubstrates.The

declineinsubstratepriceswilpromotetheadoptionofSiCsubstratesinmoredownstream

scenarios.

AnalysisoftheUnitPriceofGlobalSiCSubstrates

ThemarketpriceofglobalSiCsubstrateshasexperiencedeclinebetwen2019and2024,

mainlydrivenbyfactorsuchasincreasedmarketcompetition,costoptimizationdueto

technologicalmaturity,andgradualexpansioninproductioncapacity.Inthefuture,withthe

aceleratediterationofSiCsubstrateproductsandthecontinuousriseindemanduetothefast

developmentofdownstreamaplications,thepricedeclineforsubstratesofthesamesizeis

expectedtogradualynarow.

AveragePriceTrendsofSiCSubstrates

SiCSubstrate

Price

000’RMB/Piece202020212022202320242025E2026E2027E2028E2029E2030E

PriceRange4.4−6.44.0−6.03.6−5.63.3−5.32.7−4.72.4−4.42.3−4.32.3−4.32.3−4.32.3−4.32.3−4.3

Source:Frost&Sulivan

Thereisadecreasingtrendofthepriceofsicsubstratesduetothefactorsuchastechnical

maturity,suply−demandrelationshipandmarketcompetition.In2020,thepricerangeofSiC

substratewastypicalyRMB4,400toRMB6,400.In2024,itdeclinedtoRMB2,700toRMB4,700.

SuchpricerangeisexpectedtofurtherdeclinetoRMB2,300toRMB4,300in2030.

INDUSTRYOVERVIEW

---

AnalysisofPriceChangesofMajorUpstreamRawMaterialsforGlobalSiCSubstrates

ThemajorupstreamrawmaterialsforSiCsubstratesincludesiliconpowder,carbonpowder,

graphiteparts,graphitefeltsusedforsubstratepreparation,aswelasdiamondpowder,polishing

fluid,polishingpads,etc.usedforpost−procesingprocedures.

InthetotalcostcompositionofSiCsubstrates,carbonpowderandsiliconpowder,which

directlyformthesubstrate,usualyacountforarelativelylowproportionasrawmaterials.The

pricesofcarbonpowderandsiliconpowderarehighlypositivelycorelatedwiththeirpurity.

Higherpuritymeansmorecomplexpreparationprocesesandcostinputs,resultinginhigher

prices.Fluctuationsinthepricesoftheserawmaterialshavearelativelylimitedimpactonthe

overalcostofSiCsubstrates.Graphitepartsandgraphitefeltsacountforarelativelylarge

proportioninthecostofSiCsubstrates.However,graphitepartsandgraphitefeltsaremostly

customizedproducts,andtheirpricesdependonvariousfactors.

AveragePriceTrendsofGraphitePartsandGraphiteFelts

000’RMB/Piece202020212022202320242025E2026E2027E2028E2029E2030E

GraphiteParts2.7−3.75.0−6.06.5−7.65.0−6.05.2−6.25.4−6.45.6−6.65.8−6.86.0−7.06.2−7.26.4−7.4

GraphiteFelts7.3−8.310.6−11.617.5−18.513.1−14.114.1−15.115.1−16.116.1−17.117.1−18.118.1−19.119.1−20.120.1−21.1

Source:Frost&Sulivan

Thepricesofgraphitepartsandgraphitefeltsareprimarilyinfluencedbyfactorsuchas

materialpurity,high-temperaturestability,procescompatibility,customizationrequirements,and

procurementscale.ThepricerangeofgraphitepartswasRMB2,700toRMB3,700in2020,and

increasedtoRMB5,200toRMB6,200in2024.ThepricerangeofgraphitefeltswasRMB7,300to

RMB8,300in2020,andincreasedtoRMB14,100toRMB15,100in2024.Inthefuture,theprices

ofgraphitepartsandgraphitefeltsarexpectedtoincreaseduetotheriseoftheirawmaterial

costandincreaseinmarketdemand.

COMPETITIVELANDSCAPEOFGLOBALANDCHINA’SICSUBSTRATEMARKETS

OverviewoftheCompetitiveLandscapeofGlobalSiCSubstrateMarket

Thecompetitionlandscapeisdominatedbyafewleadingenterprises,whichavesignificant

advantagesintermsoftechnologicalstrength,productionscale,brandawarenes,andrecognition.

IntermsofthesalesrevenueofSiCsubstrates,thetotalmarketshareofthetopfivemarket

participantsin2024was68.0%.Themarketconcentrationisrelativelyhigh,withleading

enterprisestakingadominantposition.

INDUSTRYOVERVIEW

---

Ranking	Manufacturers	Revenue of SiCSubstrates (RMB Billion)	Market Share (%)
1	Company A(1)	2.07	23.5%
2	The Company	1.5	16.7%
3	Company B(2)	1.0	11.3%
4	Company C(3)	0.9	10.4%
5	Company D(4)	0.5	6.1%
CR5		6.0	68.0%

RankingofSiCSubstrateManufacturers

IntermsofthesalesrevenueofSiCsubstratesin2024,ourCompanyrankedsecondamong

globalSiCsubstratemanufacturers,withamarketshareof16.7%.

TheTopFiveGlobalSiCSubstrateManufacturers,

intermsofSalesRevenueofSiCsubstrates(2024)

23.5%

16.7%

11.3%

10.4%

6.1%

32.0%

Company A

The Company

Company B

Company C

Company D

Others

Note: The sta(cid:2)s(cid:2)cs of each manufacturer only includes products for external sales, and data of self-produced and self-

used products are not included.

1.Company A is a listed company based in Durham, United States. It focuses on silicon carbide and galium nitride

technologies for aplica(cid:2)ons in power and radio frequency.

2.Company B is a private company based in Beijing, China. It specializes in the research, development, produc(cid:2)on,

and sales of silicon carbide related materials.

3.Company C is a listed company based in Saxonburg, United States. It focuses on semiconductor materials, for

various markets including industrial, comunica(cid:2)ons, and electronics.

4.Company D is a private company based in Gumi, South Korea. It focuses on manufacturing and suplying polished

wafers and epitaxial wafers for semiconductor manufacturing.

Source: Frost & Sulivan

Source:ExpertInterview,Frost&Sulivan

(Note:Thestatisticsofeachmanufactureronlyincludesproductsforexternalsales,andataofself-producedand

self-usedproductsarenotincluded.)

KeySucesFactorsandEntryBariersintheGlobalSiCSubstrateMarket

ThekeysucesfactorsandcompetitivebariersintheglobalSiCsubstratemarketinclude:

–TechnicalKnow-how:ThepreparationofSiCsubstratesisatechnology-intensive

proces,involvingmultipletechnicalchalenges.Firstly,thegrowthofSiCcrystalsmust

becariedoutinahigh-temperatureandairtightenvironmentexceding2,000°C,which

requiresextremelyhighprecisionintemperaturecontrol.Secondly,duringthegrowth

proces,parametersuchasthesilicon-carbonratio,temperaturegradient,crystal

growthrate,andgasflowpresurenedtobepreciselycontroledtoavoidcrystalform

transformationandpolytypeinclusiondefects.Inadition,theprocesingofSiC

substratesisdificult.Reducingthemicropipedensityisakeytechnicaldirectionfor

improvingdeviceperformanceandreliability.Withtheincreaseinsubstratesize,the

INDUSTRYOVERVIEW

---

chalengesofdiameter-expansiontechnologyalsoincrease,whichrequires

comprehensivetechnicalcontrolinaspectsuchasthermalfieldesign,structural

design,andcrystalpreparationprocesdesign.Thesetechnicaldificultiesjointlyform

thehigh-techbariersoftheSiCsubstrateindustry.

–AdequateResources(Customers,Capital,Supliers,etc.):TheSiCsubstrateindustry

poseseverechalengestonewentrantsduetoitshighresourcebariers.These

chalengesincludeinvestmentinequipmentsuchascrystalgrowthfurnacesand

procesingmachinery,aswelasthecontinuousR&Dcapitalinvestmentrequiredto

maintaintechnologicaleadershipandensureproductquality.Inadition,thehighentry

thresholdforformingprofesionalmanagementandR&Dteams,andthetechnical

bariersinpreciselycontrolingmultipleparametersduringthecrystal-growthprocesto

ensurecrystalqualityandstability,alincreasethedificultyofenteringtheindustry.

Thelong-termverificationprocesofdownstreamcustomersleadstolong-term

coperationbetwencustomersandexistingsupliers.Thishighcustomerstickines

makesitdificultfornewentrantstocompeteformarketshare.Athesametime,the

intensificationofmarketcompetitionandthediversificationofdemandrequire

enterprisestohavestrongR&Dcapabilitiesandproductionflexibilitytomethe

nedsofdiferentcustomers.Thesefactorsjointlyformthedificult-to-enterthreshold

oftheSiCsubstrateindustry.

–Cost-controlCapability:Cost-controlcapabilityisakeycompetitivebarierintheSiC

substrateindustrybecauseitinvolvesmultipleaspectsuchastechnological

acumulation,equipmentinvestment,R&Dinvestment,productioneficiency,material

procesingdificulty,marketaceptance,economiesofscale,andsuplychain

management.Newentrants,duetotheirlackofexperienceandresourcesintheseareas,

finditdificultoachievecostoptimizationquickly.Earlyentrants,throughlong-term

technologicalacumulation,large-scaleproduction,andmaturesuplychain

management,havealreadyestablishedcostadvantages,putingnewentrantsunder

highercostpresureinmarketcompetitionandmakingitdificultforthemtoreachthe

samecost-controlevelasearly-stagenterprisesintheshorterm.

INDUSTRYOVERVIEW

---

–High-qualityMasProductionCapability:IntheSiCsubstrateindustry,achieving

high-qualitymasproductionisofgreatsignificance.Itsproductionandprocesingare

extremelydificultandrequirelong-termindustry-specificefortsandprofoundproces

experienceacumulation.Ontheonehand,large-scaleproductionoflarge-sized

substratesfaceschalenges.Itisnecesarytodesigncompatiblequipmentinadvance

acordingtotheprocesesofdiferent-sizedproductsbasedonaforward-loking

strategytoachieverapidproductionswitching,andathesametime,kepupwith

downstreamdemandanditeratetheproces.Ontheotherhand,therearemany

dificultiesinincreasingthefectivecrystal-growththicknes.Itisnecesaryto

overcometheimpactofthicknesandsource-powderconsumptiononthethermalfield

duringthecrystal-growthproces,andalsoensuretheconsistencyofoutputfromalarge

numberofproductionequipment.Furthermore,achievinglow-defectproductionisnot

easy.Product-relatedmeasurementindicatorsnedtobreakthroughthexistingindustry

level,anditisquitedificultoachievezero-defectdelivery.Finaly,theinvestmentin

inteligentconstructionislarge,andthethresholdishigh.High-performanceinteligent

equipment,profesionalpersonel,andmultiplesystemsarerequiredtoachieve

real-timecontrolofproductionqualityandoptimizationofmultiplelinks,soasto

achieveahighautomationrate,highproduction-eficiencyimprovement,andhigh

overalequipmenteficiency.Fornewentrants,itisdificultotakeintoacountal

aspectsandachievehigh-qualitymasproductionintheshorterm.Especialyforthe

masproductionofautomotive-gradesiliconcarbidesubstrates,astheyrequire

breakthroughsinmultipletechnicalbariersuchaslow-defectcontrol,thermalfield

stability,inteligentproduction,andautomotive-gradecertification,whilemeting

stringentreliabilityandconsistencyrequirements.

INDUSTRYOVERVIEW

---

InformationdisclosedinthisectionisrelevantPRClawsandregulationsinefectwhich

haveasignificantimpactontheoperationsoftheGroupinthePRCasofthedateofthis

prospectus(the“PRCLaws”),whicharesubjectochangeinthefuture,butitdoesnotincludea

detailedanalysisofPRCLawsrelatedtourbusinesactivitiesandoperationsinthePRC,or

serveasalPRCLawsaplicabletouroperationsinthePRC.

LAWSANDREGULATIONSRELATINGTOCORPORATIONANDFOREIGN

INVESTMENT

Thestablishment,operationandmanagementofcorporatentitiesinthePRCisgovernedby

theCompanyLawofthePRC(《中华人民共和国公司法》)(the“CompanyLaw”),whichwas

promulgatedbytheStandingComiteoftheNationalPeople’sCongresofthePRC(全国人民

代表大会常务委员会)(the“SCNPC”)onDecember29,1993,lastamendedonDecember29,

2023andimplementedonJuly1,2024.UnlesotherwiseprovidedintheForeignInvestmentLaw

(asdefinedbelow),foreign-investedentitiesarealsosubjectotheCompanyLaw.TheCompany

Lawgeneralygovernstwotypesofcompanies,namelylimitedliabilitycompaniesandjointstock

limitedcompanies.Bothtypesofcompanieshavethestatusoflegalpersons,andtheliabilityof

shareholdersofalimitedliabilitycompanyorajointstocklimitedcompanyislimitedtothe

amountofregisteredcapitaltheyhavecontributed.TheCompanyLawshalalsoaplyto

foreign-investedcompaniesinformoflimitedliabilitycompanyorjointstocklimitedcompany.

Foreign-investedentitiesinthePRCarealsorequiredtocomplywithforeigninvestmentlaws

andregulations,includingtheForeignInvestmentLawofthePRC(《中华人民共和国外商投资

法》)(the“ForeignInvestmentLaw”)promulgatedbytheNationalPeople’sCongresofthePRC

(the“NPC”)andimplementedonJanuary1,2020,andtheRegulationsonImplementingthe

ForeignInvestmentLawofthePRC(《中华人民共和国外商投资法实施条例》)promulgatedbythe

StateCouncilonDecember26,2019andimplementedonJanuary1,2020.PursuantotheForeign

InvestmentLaw,Chinahasadoptedasystemofpre-entrynationaltreatmentandanegativelistfor

theadministrationoforeigninvestment.ThenegativelistwilbeisuedbytheStateCouncilor

aprovedbytheStateCouncil.

OnSeptember6,2024,theNationalDevelopmentandReformComisionofthePRC(国家

发展和改革委员会)(the“NDRC”)andtheMOFCOMjointlyisuedtheSpecialAdministrative

Measures(NegativeList)forForeignInvestmentAces(2024Version)(《外商投资准入特别管理

措施(负面清单)(2024年版)》(the“NegativeList”),whichcameintoefectonNovember1,2024.

TheNegativeListhasetoutinaunifiedmanertheshareholdingrequirements,senior

managementrequirementsandotherspecialadministrativemeasuresforforeigninvestmentaces.

FieldsthatwerenotincludedintheNegativeListshalberegulatedacordingtotheprincipleof

equaltreatmentofdomesticandforeigninvestments.OnOctober26,2022,theMOFCOMandthe

NDRCreleasedtheCatalogueofIndustriesforEncouragingForeignInvestment(2022Version)

REGULATORYOVERVIEW

---

(《鼓励外商投资产业目录(2022年版)》)(the“EncouragingCatalogue”),whichwasimplemented

onJanuary1,2023.TheEncouragingCataloguesetsoutheindustriesinwhichforeigninvestment

isencouraged.

AcordingtotheMeasuresfortheReportingofForeignInvestmentInformation(《外商投资

信息报告办法》)jointlypromulgatedbytheMOFCOMandtheSAMRonDecember30,2019and

implementedonJanuary1,2020,whereforeigninvestorscaryoutinvestmentactivitiesdirectlyor

indirectlywithinChina,foreigninvestorsorforeign-investedenterpriseshalreportinvestment

informationtocomercialcompetentauthoritiesinacordancewiththeprovisionsofthese

measures.

AcordingtotheMeasuresfortheSecurityReviewofForeignInvestments(《外商投资安全

审查办法》)promulgatedbytheNDRCandtheMOFCOMonDecember19,2020and

implementedonJanuary18,2021,securityreviewshalbeconductedinacordancewiththe

provisionsofthesemeasuresforforeigninvestmentsthatafectormayafectnationalsecurity.A

foreigninvestororelevantpartiesinChinashaltaketheinitiativetoreportotheOficeofthe

WorkingMechanism(locatedintheNDRCandledbytheNDRCandtheMOFCOM)before

investinginimportantinfrastructurefacilities,importantransportservicesandotherimportant

fieldsrelatedtonationalsecurityandobtainingactualcontroloftheinvestedenterprises.

LAWSANDREGULATIONSRELATINGTOVERSEASINVESTMENT

AcordingtotheMeasuresfortheAdministrationofOverseasInvestment(《境外投资管理办

法》)promulgatedbytheMOFCOMonMarch16,2009,amendedonSeptember6,2014and

implementedonOctober6,2014,theoverseasinvestmentactivitiesofcompaniesandother

enterprisesestablishedinChinaresubjectothemanagementandsupervisionoftheMOFCOM

andtheprovincial-levelcomercialcompetentauthorities,andarealsosubjectothe

administrationoftheNDRCinacordancewiththeAdministrativeMeasuresforOverseas

InvestmentbyEnterprises(《企业境外投资管理办法》)promulgatedbytheNDRCand

implementedonMarch1,2018.Acordingtotheseadministrativemeasures,ifaPRCenterprise

(the“InvestmentEntity”)intendstomakeanoverseasinvestmentinvolvingsensitivecountries

andregionsandsensitivesectors,itisrequiredtoimplementheprojectaprovalmanagementof

theNDRCandtheinvestmentaprovalmanagementoftheMOFCOM.Exceptforoverseas

investmentsthataresubjectoaprovalmanagementrequirements,otheroverseasinvestment

projectshalbefiledwiththeNDRCandtheMOFCOMrespectively.BoththeNDRCandthe

MOFCOMhavestablishedonlinesystemsfortheInvestmentEntitytosubmitaproval/filing

aplicationdocumentsandinformation.Iftheaprovalorfilingisaproved,theInvestmentEntity

wilreceivetheaprovaldocumentorfilingnoticeisuedbytheNDRC,aswelastheEnterprise

OverseasInvestmentCertificateisuedbytheMOFCOM.

REGULATORYOVERVIEW

---

LAWSANDREGULATIONSRELATINGTOCUSTOMS

AcordingtotheCustomsLawofthePRC(《中华人民共和国海关法》)(the“Customs

Law”)promulgatedbytheSCNPConJanuary22,1987andlastamendedandimplementedon

April29,2021,thecustomsofthePRCisthestate’sentryandexitcustomsupervisionand

administrationauthority.InacordancewiththeCustomsLawandotherelevantlawsand

administrativeregulations,thecustomshalsupervisethetransportvehicles,gods,freightitems,

postalitemsandotheritemsenteringintoandepartingfromthePRCandcolectingtarifand

otherdutiesandcharges.Alimportedgods,throughoutheperiodfromarivalintheteritoryto

thecustomsclearance,alexportedgods,throughoutheperiodfromdeclarationtothecustoms

todeparturefromtheteritory,andtransit,transhipmentandthroughgods,throughoutheperiod

fromarivalintheteritorytodeparturefromtheteritoryshalbesubjectothesupervisionofthe

customs.Unlesotherwisespecified,thedeclarationofimportorexportgodsmaybecariedout

bytheconsignesorconsignorsorthentrustedcustomsdeclarationenterprises.Theconsignes

oftheimportedgodsandtheconsignorsofthexportedgodshaltruthfulydeclareandsubmit

theimportandexportlicensesandrelevantdocumentstothecustomsforexamination.

AcordingtotheAdministrativeProvisionsofthePRContheFilingofCustomsDeclaration

Entities(《中华人民共和国海关报关单位备案管理规定》)promulgatedbytheGeneralAdministration

ofCustomsofthePeople’sRepublicofChina(the“GeneralAdministrationofCustoms”)on

November19,2021andimplementedonJanuary1,2022,theconsignesorconsignorsofimportedor

exportedgods,aswelascustomsdeclarationenterprisesengagedincustomsdeclarationbusines,shal

gothroughthefilingproceduresatherelevantadministrationdepartmentofcustoms.

AcordingtotheForeignTradeLawofthePRC(《中华人民共和国对外贸易法》)

promulgatedbytheSCNPConMay12,1994andlastamendedonDecember30,2022andthe

NoticeoftheDepartmentofEnterpriseManagementandInspectiononMatersConcerningthe

FilingofConsignesandConsignorsofImportandExportGods(《企业管理和稽查司关于进出

口货物收发货人备案有关事宜的通知》)isuedbytheGeneralAdministrationofCustomson

January3,2023,consignesandconsignorsofimportandexportgodsaplyingforfilingshal

obtainthequalificationofmarketentitiesandarenotrequiredtobtainthefilingoforeigntrade

operators.AcordingtotheAdministrativeRegulationsontheImportandExportofGodsofthe

PRC(《中华人民共和国货物进出口管理条例》(the“AdministrativeRegulationsontheImport

andExportofGods”)promulgatedbytheStateCouncilonDecember10,2001,lastamendedon

March10,2024andimplementedonMay1,2024,tradingactivitiesinvolvingtheimportationof

godsintorthexportationofgodsoutofthecustomsteritoryofthePRCshalcomplywith

theAdministrativeRegulationsontheImportandExportofGods.Godsprohibitedfromexport

orimportarenotpermitedtobexportedorimported;godslimitedinexportorimportshalbe

subjectolicensesystemorquotacontrol;andgodsfretobexportedorimportedhaveno

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limitationinexportorimport.Importandexportoperatorshalpresentrelevantimportorexport

licensesorimportorexportquotalicensestothecustomstocompletethecustomsdeclaration,

inspectionandreleaseprocedures.

LAWSANDREGULATIONSRELATINGTOFOREIGNEXCHANGE

AcordingtotheForeignExchangeAdministrationRegulationsofthePRC(《中华人民共和

国外汇管理条例》)promulgatedbytheStateCouncilonJanuary29,1996andlastamendedand

implementedonAugust5,2008,paymentsofcurentacountitems,suchasprofitdistributions,

interestpaymentsandtradeandservicerelatedforeignexchangetransactions,canbefrely

convertibleintoandmadeinforeigncurencieswithoutprioraprovalfromtheState

AdministrationofForeignExchange(the“SAFE”),bycomplyingwithcertainprocedural

requirements.Bycontrast,prioraprovalfromoregistrationwiththeSAFEoritslocalbranches

isrequiredwhereRenminbistobeconvertedintoforeigncurencyandremitedoutofChinato

paycapitalacountitems,suchasdirectinvestments,repaymentoforeigncurency-denominated

loans,repatriationofinvestmentsandinvestmentsinsecuritiesoutsideofChina.

AcordingtotheCircularoftheStateAdministrationofForeignExchangeonFurther

SimplifyingandImprovingForeignExchangeAdministrationPoliciesforDirectInvestment(《国

家外汇管理局关于进一步简化和改进直接投资外汇管理政策的通知》)promulgatedbytheSAFE

onFebruary13,2015,implementedonJune1,2015andpartialyrepealedonDecember30,2019,

thebank,onbehalfofSAFE,shaldirectlyreviewandhandletheforeignexchangeregistration

andaprovalunderdomesticandforeigndirectinvestmentwhileSAFEanditsbranchesindirectly

supervisetheforeignexchangeregistrationandaprovalunderdirectinvestmenthroughthebank.

AcordingtotheCircularoftheStateAdministrationofForeignExchangeonReformingthe

ManagementMethodfortheSetlementofForeignExchangeCapitalofForeign-invested

Enterprises(《国家外汇管理局关于改革外商投资企业外汇资本金结汇管理方式的通知》)(the

“Circular19”)isuedbytheSAFEonMach30,2015andlastamendedandimplementedon

March23,2023,foreign-investedenterprisesarealowedtomakequityinvestmentsbyusing

RMBfundsconvertedfromforeignexchangecapital.UndertheCircular19,theforeignexchange

capitalinthecapitalacountoforeign-investedenterprisesupontheconfirmationofrightsand

interestsofmonetarycontributionbythebranchoficeoftheStateAdministrationofForeign

Exchange(orthebok-entryregistrationofmonetarycontributionbythebanks)canbesetledat

thebanksbasedontheactualoperationedsofthenterprises.Theproportionofdiscretionary

setlementoforeignexchangecapitaloforeign-investedenterprisesiscurently100%.SAFEcan

adjustsuchproportioninduetimebasedonthecircumstancesoftheinternationalbalanceof

payments.Inadition,Circular19andtheCircularoftheStateAdministrationofForeign

ExchangeonReformingandRegulatingPoliciesontheControloverForeignExchangeSetlement

ofCapitalAcounts(《国家外汇管理局关于改革和规范资本项目结汇管理政策的通知》)(the

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“Circular16”)isuedbytheSAFEonJune9,2016,lastamendedandimplementedonDecember

4,2023,providethatforeign-investedenterpriseshalnotuseRMBfundsconvertedfromits

foreignexchangecapitalforexpendituresbeyonditsbusinescopeorprohibitedbynationalaws

andregulations,securitiesinvestmentorotherinvestmentandwealthmanagementotherthan

banks’principalguarantedproducts,grantingloanstonon-afiliatedenterprises,saveasthecases

expreslypermitedinthebusinescopeorconstructingorpurchasingnon-self-userealestate

(excludingrealestatenterprises).TheCircularoftheStateAdministrationofForeignExchange

onFurtherDepeningReformstoFacilitateCros-borderTradeandInvestment(HuiFa[2023]No.

28)(《国家外汇管理局关于进一步深化改革促进跨境贸易投资便利化的通知》(汇发[2023]28号)

isuedandimplementedbytheSAFEonDecember4,2023furtherupdatestheCircularNo.16

andprovidesthatheuseofcapitalfundsofnon-financialenterprises,foreignexchangeincome

underforeigndebtandRMBfundsderivedfromforeignexchangesetlementshalfolowthe

principleoftruthfulnesandself-use,and1)itshalnotbeusedirectlyorindirectlyfor

expendituresprohibitedbynationalawsandregulations;2)unlesotherwisexpreslyprovided,

itshalnotbeusedirectlyorindirectlyforinvestmentinsecuritiesorotherinvestmentand

wealthmanagement(exceptforwealthmanagementproductsandstructuredepositswithrisk

ratingsofnothigherthanLevel2);3)itshalnotbeusedfortheisuanceofloansto

non-afiliatedenterprises(exceptforthosexpreslypermitedinthescopeofbusinesandthe

fourareasofIngangNewAreaofChina(Shanghai)PilotFreTradeZone,GuangzhouNansha

NewAreaofChina(Guangdong)PilotFreTradeZone,YangpuEconomicDevelopmentZoneof

China(Hainan)FreTradePortandBeilunDistrictofNingboCity,ZhejiangProvince);4)itshal

notbeusedforthepurchaseofnon-self-useresidentialproperties(exceptforenterprisesengaged

inrealestatedevelopmentandoperationandrealestateleasingandoperation).

OnOctober23,2019,theSAFEreleasedtheNoticeoftheStateAdministrationofForeign

ExchangeonFurtherPromotingtheFacilitationofCros-borderTradeandInvestment(《国家外汇

管理局关于进一步促进跨境贸易投资便利化的通知》),whichwaslastamendedandimplemented

onDecember4,2023,andcanceledtherestrictionsonthedomesticequityinvestmentby

non-investmentforeign-investedenterpriseswiththeircapitalfundsandnon-investment

foreign-investedenterprisesarealowedtomakedomesticequityinvestmentwiththeircapital

fundsinacordancewiththelawonthepremisethatheNegativeListisnotviolatedandthe

projectsinvestedtherebyinChinaregenuineandcompliant.

AcordingtotheCircularoftheStateAdministrationofForeignExchangeonOptimizing

ForeignExchangeAdministrationtoSuportheDevelopmentofForeign-relatedBusines(《国家

外汇管理局关于优化外汇管理支持涉外业务发展的通知》)isuedandimplementedbytheSAFE

onApril10,2020,eligiblenterprisesarealowedtomakedomesticpaymentsbyusingtheir

capital,foreigncreditsandtheincomeundercapitalacountsofoverseaslisting,withnonedto

providethevidentiarymaterialsconcerningauthenticityofsuchcapitalforbanksinadvance,

providedthatheircapitaluseshalbeauthenticandinlinewithprovisions,andconformtothe

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prevailingadministrativeregulationsontheuseofincomeundercapitalacounts.Theconcerned

bankshalfolowtheprincipleofprudentialbusinesdevelopmentomanageandcontrolrelevant

businesrisks,andconductrandomchecksonthefacilitationofpaymentfromincomeunder

capitalacountsafterwardsinacordancewithrelevantrequirements.

AcordingtotheNoticeoftheStateAdministrationofForeignExchangeonIsues

ConcerningtheForeignExchangeAdministrationofOverseasListing(《国家外汇管理局关于境外

上市外汇管理有关问题的通知》)promulgatedbytheSAFEonDecember26,2014,adomestic

companyshal,within15businesdaysfromthedateofthendofitsoverseaslistingisuance,

registertheoverseaslistingwiththelocalbranchoficeoftheStateAdministrationofForeign

Exchangeatheplaceofitsestablishment.Thefundsraisedbythedomesticompanyfrom

overseaslistingmayberepatriatedorbedepositedoverseas.Theuseofsuchfundshalbe

consistentwiththoselistedintheprospectusdocumentationforsharesortheprospectus

documentationforcorporatebonds,circularstoshareholders,resolutionsoftheBoardofDirectors

orthegeneralmetingsandotherpublicdisclosuredocuments.

LAWSANDREGULATIONSRELATINGTOENTERPRISEINVESTMENTPROJECTS

AcordingtotheRegulationsontheAdministrationofAprovalandFilingofEnterprise

InvestmentProjects(《企业投资项目核准和备案管理条例》)promulgatedbytheStateCouncilon

November30,2016andimplementedonFebruary1,2017,theChinesegovernmentimplements

aprovalmanagementforfixedasetinvestmentprojectsinvestedandconstructedbyenterprisesin

Chinathatarerelatedtonationalsecurity,majorproductivitydistribution,strategicresource

developmentandmajorpublicinterests.Thespecificprojectscope,aprovalauthorityand

aprovalpowershalbeimplementedinacordancewiththecatalogofinvestmentprojects

aprovedbythegovernment,whileotherprojectsaresubjectothefilingmanagement.

TheNoticeoftheStateCouncilonIsuingtheCatalogueofInvestmentProjectsAprovedby

theGovernment(2016version)(《国务院关于发布政府核准的投资项目录(2016年本)的通知》)

isuedandimplementedbytheStateCouncilonDecember12,2016stipulatestheprojectsubject

toaproval.

LAWSANDREGULATIONSRELATINGTOCONSTRUCTIONWORK

ConstructionWorkPlaningPermit

AcordingtotheUrbanandRuralPlaningLawofthePeople’sRepublicofChina(《中华人

民共和国城乡规划法》)promulgatedbytheSCNPConOctober28,2007andlastamendedand

implementedonApril23,2019,whenbuildinganybuilding,structure,road,pipelineandother

engineringprojectwithinacityortownplaningarea,therelevantconstructionunitorindividual

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shalaplyforaConstructionWorkPlaningPermitfromanurbanandruralplaningcompetent

authorityofthepeople’sgovernmentathemunicipalorcountylevelorapeople’sgovernmentof

townasrecognizedbythepeople’sgovernmentofaprovince,autonomousregionormunicipality

directlyundertheCentralGovernment.WhenaplyingforaConstructionWorkPlaningPermit,

thelanduserightscertificate,theconstructionworkdesignplanandothermaterialshalbe

submited.ProjectsthatmetheplaningandplaningconditionshalbegrantedaConstruction

WorkPlaningPermit.

ConstructionWorkComencementPermit

AcordingtotheConstructionLawofthePeople’sRepublicofChina(《中华人民共和国建

筑法》)promulgatedbytheSCNPConNovember1,1997andlastamendedandimplementedon

April23,2019,aconstructionunitshal,priortothecomencementofaconstructionproject,

aplyforaConstructionWorkComencementPermitoaconstructionadministrativecompetent

authorityofthepeople’sgovernmentatorabovethecountyleveloftheplacewheretheprojectis

locatedpursuantotherelevantregulationsoftheState.However,smalprojectsbelowthe

thresholdvaluesetbytheconstructionadministrativecompetentauthorityoftheStateCouncilare

subjectoexception.

PursuantotheAdministrativeMeasuresforConstructionPermitsofBuildingProjects(《建

筑工程施工许可管理办法》)promulgatedbytheMinistryofHousingandUrban-Rural

DevelopmentonOctober15,1999andlastamendedandimplementedonMarch30,2021,within

theteritoryofPRC,whenengagedintheconstructionandecorationofbuildingsandthe

subsidiaryfacilities,instalationofsuportinglines,pipelinesandequipment,aswelasthe

constructionofmunicipalinfrastructureprojectsincitiesandtowns,theconstructionunitshal

aplyforaconstructionpermitbeforestartingconstruction.Constructionprojectswiththe

investmentoflesthanRMB300,000oraconstructionareaoflesthan300squaremetersarenot

requiredforconstructionpermits.Thecompetentauthorityinchargeofhousingandurban-rural

developmentofthepeople’sgovernmentofaprovince,autonomousregionormunicipalitydirectly

undertheCentralGovernmentmay,inacordancewiththespecificircumstancesprevailingin

theirespectiveregions,readjustheselimitsandnotifythecompetentauthorityinchargeof

housingandurban-ruraldevelopmentundertheStateCouncilforitsrecords.

InspectionandAceptanceonCompletionofConstruction

AcordingtotheRulesontheAdministrationofConstructionQuality(《建设工程质量管理

条例》)promulgatedbytheStateCouncilonJanuary30,2000andamendedandimplementedon

April23,2019andtheAdministrativeMeasuresforRecordingoftheInspectionandAceptance

onConstructionCompletionofBuildingsandMunicipalInfrastructures(《房屋建筑和市政基础设

施工程竣工验收备案管理办法》)promulgatedandimplementedbytheMinistryofHousingand

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Urban-RuralDevelopmentonOctober19,2009,unitsengagedinthenewconstruction,expansion,

andreconstructionofvarioustypesofhousingconstructionandmunicipalinfrastructureprojects

inChinashalregisterwiththeconstructioncompetentauthorityofthepeople’sgovernmentator

abovethecountyleveloftheplacewheretheprojectislocatedwithin15daysfromthedatewhen

thecompletedprojectpasestheaceptancechecks.

LAWSANDREGULATIONSRELATINGTOLANDANDREALESTATEREGISTRATION

AcordingtotheCivilCodeofthePeople’sRepublicofChina(《中华人民共和国民法典》)

(the“CivilCode”)promulgatedbytheNPConMay28,2020andimplementedonJanuary1,

2021,thecreation,change,transferandeliminationoftherealrightofarealestateshalbecome

efectiveafteritisregisteredacordingtothelaw;itshalhavenoefectifitisnotregistered,

exceptitisotherwiseprescribedbyanylaw.Therealestateregistrationshalbehandledbythe

registrationauthoritywheretherealestateislocated.

AcordingtotheLandAdministrationLawofthePeople’sRepublicofChina(《中华人民共

和国土地管理法》)(the“LandAdministrationLaw”),whichwaspromulgatedbytheSCNPCon

June25,1986,amendedonAugust26,2019,andimplementedonJanuary1,2020,construction

unitsacquiringlanduserightsinrespectofstate-ownedlandataconsiderationsuchasbywayof

grantoflandshalpaylandusefeandotherfesuchaslandgrantpremiuminacordancewith

thestandardsandwaystipulatedbytheStateCouncilbeforeusingsuchland.Whenusing

state-ownedland,constructionunitshaldosoacordingtothestipulationsofthecontractfor

compensateduseofleasedlanduserightsoracordingtotheprovisionsoftheaproval

documentsrelevantothealocationoflanduserights.Iftheuseoflandischangedwithinthe

urbanplaningarea,theaprovalfromtherelevanturbanplaningcompetentauthoritieshalbe

obtainedpriortothesubmision.Landcanbeclasifiedbyuseintoagriculturaland,construction

land,andunusedland.Theconstructionlandcanbefurtherclasifiedintostate-ownedand

colectivelymanagedconstructionland,andlandusersmayobtainthelanduserightsofthe

constructionlandacordingtotheLandAdministrationLaw.Theregistrationoflandownership

anduserightshalbehandledinacordancewiththeprovisionsoflawsandadministrative

regulationsonrealestateregistration.Theplaningperiodoftheoveralanduseplanshalbe

stipulatedbytheStateCouncil.Theoveralanduseplanshalbesubjectohierarchicalaproval.

Anymodificationofanaprovedoveralanduseplanshalbeaprovedbytheoriginalaproving

authority;withoutaproval,thelandusedeterminedintheoveralanduseplanshalnotbe

changed.

AcordingtotheInterimRegulationonRealEstateRegistration(《不动产登记暂行条例》)

promulgatedbytheStateCouncilonNovember24,2014,lastamendedonMarch10,2024and

implementedonMay1,2024,realestateregistrationshalbehandledbytherealestate

registrationauthoritiesofthepeople’sgovernmentatorabovethecountylevel.Eachrealestate

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unithasauniquecode.Therealestateregistershalrecordthefolowingmaters:(i)thelocation,

boundaries,spatialboundaries,area,useandothernaturalconditionsoftherealestate;(i)the

ownershipstatusuchasthesubject,type,content,source,termandchangeofrightsofthereal

estate;(i)matersinvolvingrestrictionsandremindersofrealestaterights;and(iv)otherelated

maters.

LAWSANDREGULATIONSRELATINGTOLEASE

AcordingtotheCivilCode,ownershalhavetherightstoposes,use,benefitfromand

disposeoftheirealestateormovablepropertiesinacordancewiththelaw.

AcordingtotheManagementMeasuresfortheLeaseofComercialHousing(《商品房屋租

赁管理办法》)promulgatedbytheMinistryofHousingandUrban-RuralDevelopmenton

December1,2010andimplementedonFebruary1,2011,within30daysaftertheconclusionof

thehousingleasecontract,thepartiestotheleaseshalgototheconstruction(realestate)

competentauthoritiesofthepeople’sgovernmentofthemunicipalitiesdirectlyundertheCentral

Government,citiesandcountieswheretheleasedhousingislocatedtoregisterandfilethe

housinglease.Inviolationoftheforegoingprovisions,theconstruction(realestate)competent

authoritiesofthepeople’sgovernmentofthemunicipalitiesdirectlyundertheCentral

Government,citiesandcountieshalorderectificationwithinatimelimit.Ifrectificationisnot

madebyanentitywithinthetimelimit,afineofmorethanRMB1,000butlesthanRMB10,000

shalbeimposed.Inadition,thelawalsostipulatesthathouseswithchangesofuseinviolation

ofregulationshalnotberentedout,otherwisetheconstruction(realestate)competentauthorities

ofthepeople’sgovernmentofthemunicipalitiesdirectlyundertheCentralGovernment,citiesand

countieshalorderectificationwithinatimelimit,andifthereisnoilegalincome,afineofles

thanRMB5,000maybeimposed;ifthereisilegalincome,afinerangingfromonetothretimes

theilegalincomeandofnotmorethanRMB30,000maybeimposed.

LAWSANDREGULATIONSRELATINGTOFIRESAFETY

PursuantotheFirePreventionLawofthePeople’sRepublicofChina(《中华人民共和国消

防法》)promulgatedbytheSCNPConApril29,1998andlastamendedandimplementedonApril

29,2021,forspecialconstructionprojectstipulatedbytheMinistryofHousingandUrban-Rural

DevelopmentundertheStateCouncil,constructionunitshalsubmithefirecontroldesign

documentstotheMinistryofHousingandUrban-RuralDevelopmentforexamination,whilefor

constructionprojectsotherthanthosestipulatedaspecialconstructionprojects,constructionunits

shal,athetimeofaplyingfortheConstructionWorkComencementPermitoraprovalfor

workcomencementreport,providethefirecontroldesigndrawingsandtechnicalmaterials

whichsatisfytheconstructioneds.Thefirecontroldesignorconstructionofaconstruction

projectmustconformtothenationalfiresafetytechnicalstandardsofprojectconstruction.

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Constructionprojectsthatarerequiredbylawtoundergofirecontroldesignexaminationshalnot

beconstructedwithoutlegalexaminationorifthexaminationfails.Constructionprojectsthatare

subjectofiresafetyinspectionandaceptanceinacordancewiththelawshalnotbeputinto

useiftheyhavenotbenaceptedorareunqualifiedinfiresafetyinspectionandaceptance;

otherconstructionprojectsthatfailtopasthespotchecksacordingtolawshalbestopedfrom

use.AcordingtotheInterimRegulationsonAdministrationofExaminationandAceptanceof

FireControlDesignofConstructionProjects(《建设工程消防设计审查验收管理暂行规定》)

promulgatedbytheMinistryofHousingandUrban-RuralDevelopmentonApril1,2020and

amendedonAugust21,2023,anexaminationsystemforfirecontroldesignandaceptanceonly

apliestospecialconstructionprojects,andforotherconstructionprojects,arecord-filingand

spotchecksystemshalbeaplied.

AcordingtotheAdministrativeMeasuresforFireSafetyofLeasedFactoriesand

Warehouses(Trial)(《租赁厂房和仓库消防安全管理办法(试行)》)promulgatedbytheNational

FireandRescueAdministrationonJuly14,2023andimplementedonthesameday,lesors,

lesesandpropertyservicecompaniesofleasedfactoriesandwarehouseshalperformrelevant

firesafetyresponsibilitiesandstrengthenfiresafetymanagement.Inadition,leasedfactoriesand

warehouseshalcomplywithfiresafetyrequirementsandshalnotchangethenatureand

functionoftheuseofactoriesandwarehousesinviolationofregulations.Thelesorsandleses

ofleasedfactoriesandwarehouseshalclarifythefiresafetyresponsibilitiesofeachpartyin

writing.Ifsuchresponsibilitiesarenotclarifiedinwriting,thelesorshalberesponsibleforthe

unifiedmanagementofpublicevacuationpasages,emergencyexits,firesafetyfacilitiesof

buildings,andfirelanes,whiletheleseshalberesponsibleforthefiresafetyofleased

factoriesandwarehouses.

LAWSANDREGULATIONSRELATINGTOENVIRONMENTALPROTECTION

AcordingtotheEnvironmentalProtectionLawofthePRC(《中华人民共和国环境保护法》)

(the“EnvironmentalProtectionLaw”)promulgatedbytheSCNPConSeptember13,1979,last

amendedonApril24,2014,andcomingintoforceonJanuary1,2015,enterprises,institutionsand

otherproducersandbusinesoperatorshalpreventandreducenvironmentalpolutionand

ecologicaldamage,andbearliabilityforcompensationinacordancewiththelawforanydamage

caused.InacordancewiththeEnvironmentalProtectionLawandotherelevantlawsand

regulationsinChina,theMinistryofEnvironmentProtectionandlocalenvironmentalprotection

departmentsareresponsibleforthesupervisionandmanagementofenvironmentalprotection

work.AcordingtotheEnvironmentalProtectionLaw,constructionprojectswithenvironmental

impactshalundergoenvironmentalimpactasesment.

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EnvironmentalImpactAsesment

TheLawofthePRConEnvironmentalImpactAsesment(《中华人民共和国环境影响评价

法》)(“EnvironmentalImpactAsesmentLaw”)waspromulgatedbytheSCNPConOctober

28,2002,andlastamendedonDecember29,2018.AcordingtotheEnvironmentalImpact

AsesmentLaw,theStateimplementsclasifiedmanagementofenvironmentalimpact

asesmentsforconstructionprojectsbasedonthedegreofenvironmentalimpactofsuch

projects.

AcordingtotheInterimMeasuresfortheEnvironmentalProtectionAceptanceInspection

uponCompletionofConstructionProjects(《建设项目竣工环境保护验收暂行办法》)implemented

onNovember20,2017,andtheRegulationsontheEnvironmentalProtectionManagementof

ConstructionProjects(《建设项目环境保护管理条例》)amendedonJuly16,2017,and

implementedonOctober1,2017,afterthecompletionofaconstructionprojecthatrequiresthe

preparationofanenvironmentalimpactreportoranenvironmentalimpactstatementform,the

constructionunitshal,inacordancewiththestandardsandprocedurespecifiedbythe

environmentalprotectionadministrativecompetentauthorityoftheStateCouncil,conduct

aceptanceinspectiononthesuportingenvironmentalprotectionfacilities,andpreparean

aceptancereport.Foraconstructionprojecthatrequiresthepreparationofanenvironmental

impactreportoranenvironmentalimpactstatementform,itsuportingenvironmentalprotection

facilitiesmustpastheaceptanceinspectionbeforeitcanbeputintoproductionoruse.

AcordingtotheEnvironmentalImpactAsesmentLaw,ifaconstructionunitstarts

constructionwithoutlegalysubmitingthenvironmentalimpactreportorstatementformofa

constructionprojectforaproval,orfailstoresubmithenvironmentalimpactreportorstatement

formforaprovalore-reviewinacordancewiththeprovisionsoftheEnvironmentalImpact

AsesmentLaw,thecologicalandenvironmentalcompetentauthorityatorabovethecounty

levelshalorderthesuspensionofconstruction.Dependingonthecircumstancesoftheviolation

andtheharmcaused,afineofnotlesthan1%butnotmorethan5%ofthetotalinvestmentof

theconstructionprojectshalbeimposed,andtheunitmaybeorderedtorestoretheoriginalstate.

Thepersoninchargeoftheconstructionprojectandotheresponsiblepersonshalbegiven

administrativesanctionsinacordancewiththelaw.

PolutantDischargePermision

AcordingtotheLawofthePRConthePreventionandControlofEnvironmentalPolution

bySolidWastes(《中华人民共和国固体废物污染环境防治法》)promulgatedbytheSCNPCon

October30,1995,andlastamendedonApril29,2020,entitiesthatgeneratehazardouswasteshal

store,utilize,andisposeofhazardouswastesinacordancewithrelevantnationalrequirements

andenvironmentalprotectionstandards.Theyareprohibitedfromarbitrarilydumpingorpilingup

REGULATORYOVERVIEW

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hazardouswaste.Inadition,itisprohibitedtoprovideorentrusthazardouswastetoentitiesor

otherproducersandbusinesoperatorswithoutahazardouswastedisposalpermitforcolection,

storage,utilization,andisposalactivities.Otherwise,thecologicalenvironmentcompetent

authorityshalorderectification,imposeafine,andconfiscatetheilegalincome.Inserious

cases,uponaprovalofthepeople’sgovernment,theofendershalbeorderedtosuspendbusines

orclosedown.

AcordingtotheRegulationsontheManagementofPolutantDischargePermits(《排污许可

管理条例》)promulgatedbytheStateCouncilonJanuary24,2021,andimplementedonMarch1,

2021,aswelastheMeasuresfortheManagementofPolutantDischargePermits(《排污许可管理

办法》)promulgatedbytheMinistryofEcologyandEnvironmentonJanuary10,2018,andlast

amendedandimplementedonJuly1,2024,basedonfactorsuchastheamountofpolutants

generated,theamountofpolutantsdischarged,andthedegreofenvironmentalimpact,the

managementofpolutant-dischargingunitsisdividedintokeymanagementandsimplified

management.Thereview,decision-making,andinformationdisclosureofpolutantdischarge

permitshalbehandledthroughthenationalpolutantdischargepermitmanagementinformation

platform.Thevalidityperiodofapolutantdischargepermitis5years.Ifapolutant-discharging

unitnedstocontinuedischargingpolutants,itshalaplyforenewal60daysbeforethe

expirationofthevalidityperiod.Incaseofviolationsoftheregulationsregardingpolutant

dischargepermits,thecologicalenvironmentcompetentauthorityhasthepowertorder

rectification,restrictproduction,suspendproductionforectification,orderbusinesuspensionor

closure,andimposefines.Wheretheviolationsconstituteacrime,criminaliabilityshalbe

investigatedinacordancewiththelaw.

Enterprises,institutions,andotherproducersandbusinesoperatorsthataresubjecto

polutantdischargepermitmanagementinacordancewiththelawshalaplyforandobtaina

polutantdischargepermitinacordancewiththelaw,andischargepolutantsinacordancewith

theprovisionsofthepolutantdischargepermit.Thosethathavenotobtainedapolutantdischarge

permitshalnotdischargepolutants.

TheRegulationsonUrbanDrainageandSewageTreatment(《城镇排水与污水处理条例》)

promulgatedbytheStateCouncilonOctober2,2013,andimplementedonJanuary1,2014,as

welastheMeasuresfortheAdministrationofPermitsfortheDischargeofUrbanSewageinto

DrainagePipelines(《城镇污水排入排水管网许可管理办法》)promulgatedbytheMinistryof

HousingandUrban-RuralDevelopmentonJanuary22,2015,andlastamendedandimplemented

onFebruary1,2023,stipulatethatenterprises,institutions,andindividualindustrialand

comercialhouseholdsengagedinactivitiesuchasindustry,construction,catering,andmedical

serviceshalaplytotheurbandrainagecompetentauthorityforapermitfordischargingsewage

intotheurbandrainagepipelines(drainagepermit)beforedischargingsewageintotheurban

drainagefacilities.Ifsewageisdischargedintotheurbandrainagefacilitieswithoutadrainage

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permit,therelevanturbandrainagecompetentauthorityshalordertheviolatortostoptheilegal

act,taketreatmentmeasureswithinaspecifiedtimelimit,andaplyforthedrainagepermit

retroactively,andmayimposeafineofuptoRMB500,000.

LAWSANDREGULATIONSRELATINGTOWORKSAFETY

AcordingtotheWorkSafetyLawofthePRC(《中华人民共和国安全生产法》)promulgated

bytheSCNPConJune29,2002,andlastamendedonJune10,2021,productionandbusines

unitsmuststrengthenworksafetymanagement,establishandimproveaful-stafworksafety

responsibilitysystemandworksafetyrulesandregulations,increaseinvestmentinworksafetyin

termsofunds,materials,technology,andpersonel,improveworksafetyconditions,strengthen

thestandardizationandinformationizationofworksafety,establishadual-preventionmechanism

forhierarchicalmanagementandcontrolofsafetyrisksandinvestigationandtreatmentof

potentialhazards,improvetheriskpreventionandmitigationmechanism,enhancetheworksafety

level,andensureworksafety.

REGULATIONSRELATINGTOCYBERSECURITYANDATAPROTECTION

Inrecentyears,PRCgovernmentauthoritieshavenactedlawsandregulationsrelatingto

cybersecurityandataprotection.Wecolectandstorebusinesdatandtransactiondata

generateduringorinconectionwithourbusinesoperations,anduseinformationtechnology

systemsandnetworkinthecourseofourbusinesandarethereforesubjectosuchlawsand

regulations.TheDecisionsonProtectionofInternetSecurityenactedbytheSCNPC(《全国人民代

表大会常务委员会关于维护互联网安全的决定》)waspromulgatedin2000,asamendedonAugust

27,2009,providesthat,amongotherthings,thefolowingactivitiesconductedthroughthe

internet,ifconstitutingacrimeacordingtoPRClaws,aresubjectocriminalpunishment:(i)

intrusionintoanycomputerinformationsystemrelatingtostateafairs,nationaldefense

constructionorcuting-edgescienceandtechnology;(i)intentionalyinventingandiseminating

destructiveprograms,suchascomputerviruses,toatackthecomputersystemandthe

comunicationsnetwork,therebydamagingthecomputersystemandthecomunications

networks;(i)violatingnationalregulations,suspendingthecomputernetworksorthe

comunicationserviceswithoutauthorization,causingthecomputernetworkorcomunication

systemtofailtoperatenormaly;(iv)leakingstatesecrets;(v)spreadingfalsecomercial

information;or(vi)infringingintelectualpropertyrightsthroughinternet,etc.

OnJuly1,2015,theSCNPCisuedandimplementedtheNationalSecurityLawofthePRC

(《中华人民共和国家安全法》),pursuantowhichtheStateshalsafeguardthesovereignty,

securityandevelopmentinterestsofcyberspaceoftheState,andthatheStateshalestablisha

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nationalsecurityreviewandsupervisionsystemtoreview,amongotherthings,foreigninvestment,

keytechnologies,internetandinformationtechnologyproductsandservices,andotherimportant

activitiesthatarelikelytoimpacthenationalsecurityofthePRC.

OnNovember7,2016,theSCNPCpromulgatedtheCybersecurityLawofthePRC(《中华人

民共和国网络安全法》)(the“CybersecurityLaw”),whichwasimplementedonJune1,2017,and

apliestotheconstruction,operation,maintenanceanduseofnetworksaswelasthesupervision

andadministrationofcybersecurityinthePRC.AcordingtotheCybersecurityLaw,network

operatorsarebroadlydefinedasownersandadministratorsofnetworksandnetworkservice

providers,andsuchnetworkoperatorshalcomplywithlawsandregulationsandfulfiltheir

obligationstosafeguardsecurityofthenetworkwhenconductingbusinesandprovidingservices.

Thosewhoconstructoroperatenetworksorprovideservicesthroughnetworkshaltaketechnical

measuresandothernecesarymeasurespursuantothemandatoryrequirementsoflaws,

regulationsandnationalstandardstosafeguardthesafeandstableoperationofthenetworks,

respondtonetworksecurityincidentsefectively,preventilegalandcriminalactivities,and

maintaintheintegrity,confidentialityandusabilityofnetworkdata,andanetworkoperatorshal

notcolecthepersonalinformationirelevantotheservicesitprovidesorcolectorusethe

personalinformationinviolationoftheprovisionsoflawsoragrementsbetwenbothparties.In

adition,criticalinformationinfrastructureoperators(“CIOs”)shal,duringtheiroperationsin

thePRC,storewithinthePRCthepersonalinformationandimportantdatacolectedandgenerated

withintheteritoryofthePRC,andwherecros-bordertransferofsuchdataisnecesaryfor

busines,asecurityasesmentshalbeconductedinacordancewiththemeasuresformulatedby

thenationalcyberspaceauthorityinconjunctionwiththerelevantdepartmentsundertheState

Council.

OnJune10,2021,theSCNPCpromulgatedtheDataSecurityLawofPRC(《中华人民共和

国数据安全法》)(the“DataSecurityLaw”)whichwasimplementedonSeptember1,2021.The

DataSecurityLawmainlysetsforthspecificprovisionsregardingestablishingbasicsystemsfor

datasecuritymanagement,includinghierarchicaldataclasificationmanagementsystem,risk

asesmentsystem,monitoringandearlywarningsystem,andemergencydisposalsystem.In

adition,itclarifiesthedatasecurityprotectionobligationsoforganizationsandindividuals

caryingoutdatactivitiesandimplementingdatasecurityprotectionresponsibility,including

withoutlimitation,thatanyorganizationorindividualcolectingdatashaladoptlawfulandproper

methodsandshalnotstealdataorobtainthedatabyotherilegalmeans,andriskmonitoring

shalbestrengthenedwhendataprocesingactivitiesarecariedout,andwhererisksuchasdata

securityflawsandvulnerabilitiesarediscovered,remedialmeasureshalbeimediatelytaken.

OnNovember14,2021,theCyberspaceAdministrationofChina(the“CAC”)publishedthe

RegulationsonNetworkDataSecurityManagement(DraftforComents)(《网络数据安全管理条

例(征求意见稿)》)(the“DraftRegulationsonCyberDataSecurityManagement”)which

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specifiesthatdataprocesorswhoprocesthepersonalinformationofmorethanonemilion

individualsandsekaforeignlisting,ordataprocesorswhosekaHongKonglistingwhich

mightafectorpotentialyafectnationalsecurity,shalaplyforcybersecurityreview.On

September24,2024,theAdministrationRegulationsonNetworkDataSecurity(《网络数据安全管

理条例》)(the“RegulationonCyberDataSecurity”)ispublished,whichwilcomeintoefect

onJanuary1,2025.TheRegulationonCyberDataSecurityreiteratesthegeneralregulationsfor

cyberdataprocesingactivities,rulesofpersonalinformationprotection,importantdatasecurity

protection,networkdatacros-bordertransfermanagement,andtheresponsibilitiesofinternet

platformserviceproviders.Inadition,unliketheDraftRegulationsonCyberDataSecurity

Management,theoficialypromulgatedRegulationonCyberDataSecuritydoesnotspecificaly

includetherequirementhatcyberdataprocesingentitiesekingaHongKonglistingthatafects

ormayafectnationalsecurityshouldaplyforacybersecurityreview.Instead,theRegulationon

CyberDataSecuritygeneralyprovidesthatcyberdataprocesorswhosecyberdataprocesing

activitiesafectormayafectnationalsecurityshalbesubjectonationalsecurityreviewin

acordancewiththerelevantregulations.TheRegulationonCyberDataSecurityisrelevantlynew

andthereisnofurtherexplanationorinterpretationonwhatkindofactivities“afectormayafect

nationalsecurity”undertheRegulationonCyberDataSecurityet.

OnDecember28,2021,theCACandothertwelvePRCregulatoryauthoritiesjointlyrevised

andpromulgatedtheMeasuresforCybersecurityReview(《网络安全审查办法》)(the

“CybersecurityReviewMeasures”)whichwasimplementedonFebruary15,2022.The

CybersecurityReviewMeasuresprovidesthat,amongothers,(i)aCIOpurchasingnetwork

productsandservicesoranetworkplatformoperatorthatengagesindataprocesingactivitiesthat

afectormayafectnationalsecurityshalbesubjectothecybersecurityreviewbythe

CybersecurityReviewOfice,thedepartmentwhichisresponsiblefortheimplementationof

cybersecurityreviewundertheCAC;(i)anetworkplatformoperatorwithpersonalinformationof

morethanonemilionusers,whichsekslistinginaforeigncountry,isobligedtoaplyfora

cybersecurityreviewbytheCybersecurityReviewOfice;and(i)therelevantregulatory

authoritiesmayinitiatecybersecurityreviewifsuchregulatoryauthoritiesdeterminethathe

isuer’snetworkproductsorservices,ordataprocesingactivitiesafectormayafectnational

security.

OnJuly7,2022,theCACpromulgatedtheMeasuresonSecurityAsesmentofCros-border

DataTransfer(《数据出境安全评估办法》)(the“SecurityAsesmentMeasures”),whichwas

implementedonSeptember1,2022.TheSecurityAsesmentMeasuresapliestoalprocesorsof

datandrequiresthatanydataprocesorprovidingimportantdatacolectedandgenerateduring

operationswithintheteritoryofthePRCorpersonalinformationthatshouldbesubjecto

securityasesmentacordingtotherelevantlawtoanoverseasrecipientshalconductsecurity

asesment.TheSecurityAsesmentMeasuresprovidesfourcircumstances,underanyofwhich

dataprocesorshal,throughthelocalcyberspaceadministrationatheprovincialevel,aplyto

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thenationalcyberspaceadministrationforsecurityasesmentofcros-borderdatatransfer.These

circumstancesinclude:(i)whereimportantdataistransferedtoanoverseasrecipient;(i)where

personalinformationistransferedtoanoverseasrecipientbyaCIOoradataprocesorwhohas

procesedpersonalinformationofmorethanonemilionpeople;(i)whereadataprocesor

providespersonalinformationtoanoverseasrecipientifsuchdataprocesorhasalreadyprovided

overseasthepersonalinformationof100,000individualsorsensitivepersonalinformationof

10,000individualsintotalsinceJanuary1oftheprecedingyear;or(iv)othercircumstancesunder

whichsecurityasesmentofoutboundatatransferisrequiredasprescribedbythenational

cyberspaceadministration.

OnMarch22,2024,theCACpromulgatedtheProvisionsonPromotingandRegulating

Cros-BorderDataFlows(《促进和规范数据跨境流动规定》),efectiveonthedateof

promulgation.Theprovisionsprovideseveralexemptionstoprocesorsofdata,whichexempt

themfromundergoingdatasecurityasesment,obtainingpersonalinformationprotection

certification,orenteringintostandardcontractsforoutboundtransferofpersonalinformationfor

busineses.Thesexemptionsinclude,amongothers,scenarioswhereadataprocesor,otherthan

aCIO,hascumulativelytransferedpersonalinformation(excludingsensitivepersonal

information)ofewerthan100,000individualstoverseasrecipientsinceJanuary1ofthe

curentyear.Inadition,adataprocesor,otherthanaCIO,shalenterintoastandardcontract

withoverseasrecipientsforthecros-bordertransferofpersonalinformation,orobtain

certificationforpersonalinformationprotectionif,sinceJanuary1ofthecurentyear,thedata

procesorhascumulativelytransferedtoverseasrecipientspersonalinformation(excluding

sensitivepersonalinformation)ofmorethan100,000butfewerthan1,000,000individuals,or

sensitivepersonalinformationofewerthan10,000individuals.Theprovisionsalsoexplicitly

statethatdataprocesorsarenotrequiredtoaplyforsecurityasesmentoncros-bordertransfer

ofimportantdata,providedthatherelevantdatahasnotbenotifiedorpublishedasimportant

databyrelevantdepartmentsoregions.

Inordertoguideandasistdataprocesorsinsubmitingdataexportsecurityasesmentsin

astandardizedandorderlymaner,theCACpreparedtheGuidelinesforDataExportSecurity

AsesmentAplication(Version3.0)(《数据出境安全评估申报指南(第三版)》)inJune2025,

whichprovidespecificrequirementsforthemethod,proces,andmaterialsrequiredforsubmiting

adataexportsecurityasesmentaplicationandsimplifythematerialsrequiredtobesubmited

bythedataprocesors.

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LAWSANDREGULATIONSRELATINGTOINTELECTUALPROPERTIES

Trademarks

AcordingtotheTrademarkLawofthePRC(《中华人民共和国商标法》)(the“Trademark

Law”)promulgatedbytheSCNPConAugust23,1982,lastamendedonApril23,2019,and

implementedonNovember1,2019,aswelastheImplementationRegulationsoftheTrademark

LawofthePRC(《中华人民共和国商标法实施条例》)promulgatedbytheStateCouncilon

August3,2002,lastamendedonApril29,2014,andimplementedonMay1,2014,registered

trademarksinChinaincludegodstrademarks,servicetrademarks,colectivetrademarks,and

certificationtrademarks.TheTrademarkOficeofChinaNationalIntelectualProperty

Administrationisresponsibleforhandlingtrademarkregistrations.Aregisteredtrademarkis

grantedaten-yearvalidityperiod,anduponrequest,anaditionalten-yearperiodmaybegranted

uponthexpirationofthefirstoranyrenewedten-yearterm.TheTrademarkLawadoptsthe

“first-to-file”principlefortrademarkregistration.Actsthatconstituteinfringementofthe

exclusiverightousearegisteredtrademarkinclude,butarenotlimitedto,usingatrademark

identicalwithorsimilartoaregisteredtrademarkonthesamekindofgodsorsimilargods

withouthepermisionofthetrademarkregistrant.Wheretheadministrativedepartmentfor

industryandcomercedeterminesthataninfringementhasbenestablished,itshalorderthe

infringertoimediatelystoptheinfringingactandmayimposeafine.Inadition,theinfringer

mustalsobearliabilityforcompensatingthelosesoftheright-holder.

Patents

AcordingtothePatentLawofthePRC(《中华人民共和国专利法》)promulgatedbythe

SCNPConMarch12,1984,lastamendedonOctober17,2020,andimplementedonJune1,2021,

aswelastheImplementationRulesofthePatentLawofthePRC(《中华人民共和国专利法实施

细则》)promulgatedbytheStateCouncil,lastamendedonDecember11,2023,andimplemented

onJanuary20,2024,therearethretypesofpatentsinChina,namelyinventionpatents,utility

modelpatents,andesignpatents.Theprotectionperiodofaninventionpatentis20years,thatof

autilitymodelpatentis10years,andthatofadesignpatentis15years,comencingfromtheir

respectiveaplicationdates.TheChinesepatentsystemimplementsthe“first-to-file”principle.

Thatis,wheretwormoreaplicantsfileaplicationsforpatentsforthesameinvention-creation

respectively,thepatentrightshalbegrantedtotheaplicantwhofilestheaplicationfirst.The

implementationofapatentwithouthepermisionofthepatenteconstitutespatentinfringement.

Theinfringershalbearliabilityforcompensationtothepatente,andmaybefinedorevenheld

criminalyliable.

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SoftwareRegistration

AcordingtotheRegulationsonComputerSoftwareProtection(《计算机软件保护条例》)

promulgatedbytheStateCouncilonJune4,1991,andlastamendedonJanuary30,2013,aswel

astheMeasuresfortheRegistrationofComputerSoftwareCopyrights(《计算机软件著作权登记

办法》)promulgatedbytheNationalCopyrightAdministrationonApril6,1992,lastamendedon

June18,2004,andimplementedonJuly1,2004,theNationalCopyrightAdministrationis

responsiblefortheregistrationandmanagementofsoftwarecopyrightsinmainlandChinandhas

designatedtheChinaCopyrightProtectionCenterasthesoftwareregistrationauthority.TheChina

CopyrightProtectionCentershalisueregistrationcertificatestoaplicantsforcomputersoftware

copyrightsincompliancewiththeprovisionsoftheMeasuresfortheRegistrationofComputer

SoftwareCopyrightsandtheRegulationsonComputerSoftwareProtection.

DomainNames

AcordingtotheAdministrativeMeasuresforInternetDomainNames(《互联网域名管理办

法》)promulgatedbytheMinistryofIndustryandInformationTechnologyonAugust24,2017,

andimplementedonNovember1,2017,theMinistryofIndustryandInformationTechnologyis

theprimaryregulatorybodyfornationaldomainameservices.Thedomainameservicesfolow

the“first-come,first-served”principle.Aplicantsfordomainameregistrationshalprovidethe

domainameregistrationinstitutionwithtrue,acurate,andcompleteidentityinformationofthe

domainameholderforegistrationpurposes.Theaplicantshalbecometheholdersofsuch

domainamesuponsucesfulregistration.

REGULATIONSRELATINGTOEQUITYINCENTIVEPLANS

AcordingtotheNoticeoftheStateAdministrationofForeignExchangeonIsues

ConcerningtheForeignExchangeAdministrationofDomesticIndividuals’ParticipationinEquity

IncentivePlansofOverseas-listedCompanies(《国家外汇管理局关于境内个人参与境外上市公司

股权激励计划外汇管理有关问题的通知》)isuedandimplementedbytheSAFEonFebruary15,

2012,andotherelevantregulations,directors,supervisors,seniormanagementmembersandother

employeswhoareChinesecitizensornon-Chinesecitizenswhohavecontinuouslyresidedin

Chinafornotlesthanoneyear,whenparticipatinginanyequityincentiveplanofan

overseas-listedcompany,exceptforafewexceptionalcases,musthandlematersuchasforeign

exchangeregistration,acountopening,fundtransferandexchangewiththeStateAdministration

ofForeignExchangethroughadomesticagency.Inadition,anoverseasentrustedinstitutionmust

bengagedtohandlematersuchasindividualexerciseofrights,purchaseandsaleof

corespondingstocksorinterests,andthecorespondingfundtransfer.

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TheforeignexchangeincomeobtainedbyChineseresidentsfromselingsharesunderthe

equityincentiveplanandthedividendsdistributedbyoverseas-listedcompanieshalberemited

intothebankacountsopenedinChinabydomesticinstitutionsandthendistributedtoChinese

residents.

LAWSANDREGULATIONSRELATINGTOTAXATION

EnterpriseIncomeTax

AcordingtotheEnterpriseIncomeTaxLaw(《企业所得税法》)promulgatedbytheSCNPC

onMarch16,2007,andlastamendedandimplementedonDecember29,2018,aswelasthe

ImplementationRegulationsoftheEnterpriseIncomeTaxLawofthePRC(《中华人民共和国企业

所得税法实施条例》)promulgatedbytheStateCouncilonDecember6,2007,lastamendedon

December6,2024,andimplementedonJanuary20,2025,domesticenterprisesthatarelegaly

establishedwithintheteritoryofChina,orthatarestablishedinacordancewiththelawsof

foreigncountries(regions)butwhoseactualmanagementinstitutionsarewithintheteritoryof

Chinashalberegardedasresidententerprises.Residententerpriseshalpayenterpriseincome

taxatarateof25%ontheirincomesourcedfrombothinsideandoutsideChina.Preferential

enterpriseincometaxratesaplytoanymajorindustriesorprojectsuportedorencouragedby

theState.High-techenterprisestowhichtheStatenedstogivekeysuportcanenjoyareduced

enterpriseincometaxrateof15%.

VAT

AcordingtotheInterimRegulationsofthePRConVAT(《中华人民共和国增值税暂行条

例》)promulgatedbytheStateCouncilonDecember13,1993,latestamendedandimplementedon

November19,2017,andtheDetailedRulesfortheImplementationoftheInterimRegulationsof

thePRConVAT(《中华人民共和国增值税暂行条例实施细则》)promulgatedbytheMOFon

December15,1993,latestamendedonOctober28,2011andimplementedonNovember1,2011,

altaxpayersinthePRCengaginginsaleofgodsorprocesing,repairoreplacementoflabor

services,saleofservices,intangibleasets,imovables,andimportofgodshalpayVAT.

Unlesotherwisespecified,forthesaleofgods,theprovisionofservices,theprovisionof

tangiblepersonalpropertyleasingservicesortheimportationofgods,thetaxrateshalbe

17.0%.

TheCircularoftheMinistryofFinanceandtheStateAdministrationofTaxationon

AdjustmentofVATaxRates(《财政部、国家税务总局关于调整增值税率的通知》)

promulgatedbytheMOFandtheSTAonApril4,2018andimplementedonMay1,2018adjusted

theaplicativerateofVAT,andthetaxratesof17.0%and11.0%aplicabletothetaxpayerswho

haveVATtaxablesalesactivitiesorimportedgodsareadjustedto16.0%and10.0%,respectively.

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AcordingtotheAnouncementonRelevantPoliciesforDepeningVATReform(《关于深化

增值税改革有关政策的公告》)isuedbytheMOF,theSTAandtheGeneralAdministrationof

CustomsonMarch20,2019andimplementedonApril1,2019,theVATratesof16%and10%on

salesandimportedgodshalbeadjustedto13%and9%,respectively.

LAWSANDREGULATIONSRELATINGTOEMPLOYMENTANDSOCIALSECURITY

LaborContract

AcordingtothePRCLaborLaw(《中华人民共和国劳动法》),whichwaspromulgatedby

theSCNPConJuly5,1994andlatestamendedandimplementedonDecember29,2018,thePRC

LaborContractLaw(《中华人民共和国劳动合同法》),whichwaspromulgatedbytheSCNPCon

June29,2007,latestamendedonDecember28,2012andimplementedonJuly1,2013,andthe

ImplementingRegulationsoftheLaborContractLawofthePRC(《中华人民共和国劳动合同法实

施条例》),whichwaspromulgatedandimplementedbytheStateCouncilonSeptember18,2008,

employershalestablishandimprovelaborulesandregulationsacordingtothelaws,strictly

complywiththenationalstandards,providerelevantrainingstoitsemployes,protectheirlabor

rightsandperformitslaborobligations.Laborcontractsinwritenformshalbexecutedto

establishlaborelationshipsbetwenemployersandemployes.Laborcontractshalbe

categorizedintocontractswithfixedterm,contractswithoutfixedtermandcontractstobexpired

uponcompletionofcertaintasks.Thesalarypaidbythemployerstothemployeshalnotbe

lowerthantheminimumsalarystandardinthelocationwherethemployersarelocated.In

adition,employersmustestablishandimprovethesystemforlaborsafetyandsanitation,strictly

implementhenationalprotocolsandproceduresonlaborsafetyandsanitation,provideducation

onlaborsafetyandsanitationtoemployes,guardagainstlaborsafetyacidentsandreduce

ocupationalhazards.

SocialInsurance

ThePRCSocialInsuranceLaw(《中华人民共和国社会保险法》)(the“SocialInsurance

Law”),promulgatedbytheSCNPConOctober28,2010andlatestamendedandimplementedon

December29,2018,hasestablishedsocialinsurancesystemsofbasicpensioninsurance,basic

medicalinsurance,work-relatedinjuryinsurance,unemploymentinsuranceandmaternityinsurance

andhaselaboratedindetailthelegalobligationsandliabilitiesofemployerswhofailtocomply

withrelevantlawsandregulationsonsocialinsurance.AcordingtotheSocialInsuranceLawand

theProvisionalRegulationsonColectionandPaymentofSocialInsurancePremiums(《社会保险

费征缴暂行条例》)promulgatedbytheStateCouncilonJanuary22,1999andlatestamendedon

March24,2019andimplementedonthesamedate,enterpriseshalregistersocialinsurancewith

localsocialinsuranceandpayorwitholdrelevantsocialinsuranceforitsemployes.Any

employerthatfailstomakesocialinsurancecontributionsmaybeorderedtopaytherequired

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contributionswithinaprescribedtimelimitandbesubjectoalatefe.Ifthemployerstilfails

tomaketherelevantcontributionswithintheprescribedtime,itmaybesubjectoafineranging

fromonetothretimestheamountoverdue.

HousingProvidentFund

AcordingtotheRegulationsontheAdministrationofHousingProvidentFunds(《住房公积

金管理条例》)promulgatedbytheStateCouncilonApril3,1999andlatestamendedand

implementedonMarch24,2019,employersmustregisterathehousingprovidentfund

managementcenterforpaymentandepositofthehousingprovidentfund,andhandlethe

establishmentortransferproceduresofhousingprovidentfundacountsonbehalfofitsemployes

fordepositingemployes’housingprovidentfunds.Employersandemployesarealsorequiredto

payandeposithousingprovidentfunds,withtheratenolesthan5%ofthemonthlyaverage

salaryofthemployeintheprecedingyearinfulandontime.Incaseofoverduepaymentor

underpaymentbyemployers,ordersforpaymentwithinaspecifiedperiodwilbemadebythe

housingprovidentfundmanagementcenter.Wheremployersfailtomakepaymentwithinsuch

period,enforcementbythepeople’scourtmaybeaplied.

LAWSANDREGULATIONSRELATINGTOSECURITIESANDOVERSEASLISTINGS

SecuritiesLawsandRegulations

TheSecuritiesLawofthePeople’sRepublicofChina,whichwaspromulgatedbytheSCNPC

onDecember29,1998,latestamendedonDecember28,2019andimplementedonMarch1,2020,

comprehensivelyregulatesactivitiesinthePRCsecuritiesmarketincludingisuanceandtradingof

securities,takeoversbylistedcompanies,securitiesexchangesandsecuritiescompaniesandthe

dutiesandresponsibilitiesofsecuritiesregulatoryauthorities,etc.TheSecuritiesLawfurther

regulatesthatadomesticenterpriseisuingsecuritiesoverseasdirectlyorindirectlyorlistingand

tradingitsecuritiesoverseashalcomplywiththerelevantprovisionsoftheStateCounciland

forsubscriptionandtradingofsharesofdomesticompaniesusingforeigncurencies,detailed

measureshalbestipulatedbytheStateCouncilseparately.TheCSRCisthesecuritiesregulatory

bodysetupbytheStateCounciltosuperviseandadministerthesecuritiesmarketacordingto

law,maintainorderinthemarket,andensurethemarketoperatesinalawfulmaner.Curently,

theisueandtradingofHsharesareprincipalygovernedbytheregulationsandrules

promulgatedbytheStateCouncilandtheCSRC.

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OverseasListings

TheCSRCpromulgatedtheTrialAdministrativeMeasuresofOverseasSecuritiesOfering

andListingbyDomesticCompanies(《境内企业境外发行证券和上市管理试行办法》)(the

“OverseasListingTrialMeasures”)andfivesuportinguidelinesonFebruary17,2023,which

wereimplementedonMarch31,2023.TheOverseasListingTrialMeasuresintroduceanewfiling

regime.UndertheOverseasListingTrialMeasures,domesticompaniesthatsektoferorlist

theirsecuritiesinoverseasmarkets,eitherindirectorindirectmeans,arerequiredtofilethe

requiredocumentswiththeCSRCwithinthreworkingdaysafteritsaplicationforoverseas

listingisubmited.TheOverseasListingTrialMeasuresprovidethatoverseaslistingandofering

arexplicitlyprohibited,ifanyofthefolowingaplies:(i)suchsecuritieslistingandfinancing

arexplicitlyprohibitedbyprovisionsinlaws,administrativeregulationsorelevantstaterules;

(i)theoverseaslistingmayendangernationalsecurityasreviewedandeterminedbycompetent

authoritiesundertheStateCouncilinacordancewithlaw;(i)thedomesticompanyorits

controlingshareholder(s)andtheactualcontroler,havecomitedcrimesincludingcoruption,

bribery,embezlement,misapropriationofpropertyorunderminingtheorderofthesocialist

marketeconomyinthepasthreyears;(iv)thedomesticompanyiscurentlyunder

investigationsforsuspicionofcriminalofensesormajorviolationsoflawsandregulationswhich

havenotdefinitiveconclusion;or(v)therearematerialownershipdisputesoverequityheldbythe

controlingshareholder(s)orbyothershareholder(s)thatarecontroledbythecontroling

shareholder(s)andactualcontroler.AsadvisedbyourPRCLegalAdvisor,wedonotfalunder

anyoftheaforementionedcircumstancesthatwouldprohibitusfromlistingoverseas.

Inadition,acordingtotheOverseasListingTrialMeasures,afteroferingandlisting

securitiesinoverseasmarkets,theisuershalsubmitareportotheCSRCwithinthreworking

daysaftertheocurenceandpublicdisclosureof(i)changeofcontrol;(i)measuresuchas

investigationandpunishmentimposedontheisuerbyoverseasecuritiesregulatorsorelevant

competentauthorities;(i)changesoflistingstatusortransfersoflistingsegment,and(iv)a

voluntaryormandatorydelisting.Overseasoferingandlistingbydomesticompanieshal

strictlycomplywithrelevantlaws,administrativeregulations,andnationalsecurityprovisionson

foreigninvestment,cybersecurity,datasecurityandetc.,andulyfulfiltheirobligationsto

protectnationalsecurity.

REGULATORYOVERVIEW

---

TheCSRCandotherthrerelevantgovernmentauthoritiesjointlypromulgatedtheProvisions

onStrengtheningtheConfidentialityandArchivesAdministrationofOverseasSecuritiesOfering

andListingbyDomesticCompanies(《关于加强境内企业境外发行证券和上市相关保密和档案管

理工作的规定》)(the“ProvisiononConfidentiality”)onFebruary24,2023,whichimplemented

onMarch31,2023.PursuantotheProvisiononConfidentiality,whenadomesticompany

providesorpubliclydisclosesthedocumentsandmaterialsinvolvingstatesecretsandworking

secretsofstateorganstotherelevantsecuritiescompanies,securitieserviceinstitutions,overseas

regulatoryauthoritiesandotherentitiesandindividuals,orprovidesorpubliclydisclosesuch

documentsandmaterialsthroughitsoverseaslistingsubjects,itshalreportothecompetent

authoritywiththexaminationandaprovalauthorityforaproval,andfilewiththesamelevel

secrecyadministrationdepartmentinacordancewiththelaw.Domesticompaniesproviding

acountingarchivesorcopiesthereoftoentitiesandindividualsuchasecuritiescompanies,

securitieserviceinstitutionsandoverseasregulatoryauthoritieshalperformthecoresponding

proceduresacordingtorelevantnationalregulations.Theworkingpapersformedwithinthe

teritoryofthePRCbythesecuritiescompaniesandsecuritieserviceinstitutionsthatprovide

relatedsecuritieservicesfortheoverseasoferingandlistingofdomesticenterpriseshalbekept

withintheteritoryofthePRC.Cros-bordertransferingofsuchworkingpapershalgothrough

thexaminationandaprovalformalitiesinacordancewiththerelevantnationalregulations.

REGULATORYOVERVIEW

---

OVERVIEW

Ourhistorycanbetracedbackto2010,whenMr.ZongYanmin(宗艳民),ourfounder,

foundedSICMaterialsCo.,Ltd.(山东天岳先进材料科技有限公司),ourpredecesor,on

November2,2010,toprimarilyengageintheresearchandevelopment,manufacturingandsales

ofSiCsubstrates.ThroughoutmorethanadecadeofdevelopmentundertheleadershipofMr.

Zong,wehavebecomealeaderinthewidebandgapsemiconductormaterialindustry,focusingon

theresearch,developmentandindustrializationofhigh-qualitySiCsubstrates.

From2010to2020,ourpredecesorcompletedseveralroundsofcapitalcontributionand

equityinterestransfers,andwereconvertedintoajointstocklimitedcompanyunderthenameof

SICo.,Ltd.(山东天岳先进科技股份有限公司)inNovember2020,withMr.Zongbeingour

primarypromoter.OnJanuary12,2022,ourAShareswerelistedontheSTARMarket(stock

code:688234)(the“A-SharesListing”).Se“—MajorShareholdingChangesofOurCompany

—ConversionintoaJointStockLimitedCompanyandA-SharesListing”inthisectionformore

details.

OURKEYMILESTONES

ThefolowingisasumaryofourGroup’skeybusinesdevelopmentmilestones:

YearMilestone

2010SICMaterialsCo.,Ltd.(山东天岳先进材料科技有限公司),ourpredecesor,was

establishedinShandong,thePRCasalimitedliabilitycompany

2015OurJinanSiCsemiconductormaterialproductionplantwasputintoperation

Wesucesfulyachievedthemasproductionof4-inchSiCsubstrates

2020Ourpredecesorwasconvertedintoajointstocklimitedcompanyunderthename

ofSICo.,Ltd.(山东天岳先进科技股份有限公司)

2021Wesucesfulyachievedthemasproductionfor6-inchSiCsubstrates

2022OurCompanybecamelistedontheSTARMarket(stockcode:688234)

2023Weachievedthemasproductionof8-inchSiCsubstrates

2024Weintroducedtheindustry’sfirst12-inchSiCsubstrate

HISTORY,DEVELOPMENTANDCORPORATESTRUCTURE

---

OURMAJORSUBSIDIARIES

AsoftheLatestPracticableDate,thefolowingentitieswereourmajorsubsidiarieswhich

hadmadeamaterialcontributiontouresultsofoperationduringtheTrackRecordPeriod:

Nameofsubsidiary

Placeof

incorporation

Dateof

incorporation

Equityinterest

atributableto

ourGroup

Principalbusines

activities

ShanghaiTianyue

.

PRCJune2,2020100%Researchand

development,

productionandsales

ofSiCsubstrates

ShanghaiYuefu

.

PRCDecember6,

100%Procurementofraw

materialsand

equipmentrelatedto

theSiCproduction

MAJORSHAREHOLDINGCHANGESOFOURCOMPANY

EarlyDevelopmentofourCompany

OnNovember2,2010,ourpredecesorwasestablishedunderthenameofSICMaterials

Co.,Ltd.(山东天岳先进材料科技有限公司)asalimitedliabilitycompanyunderthelawsofthe

PRC.TheinitialregisteredcapitalofourpredecesorwasRMB20milion,whichwasfuly

contributedbyMr.Zongandhiscontroledentity.

UponcompletingmultipleroundsofsharetransfersandcapitalinjectionsbetwenNovember

2010toOctober2020,theregisteredcapitalofourpredecesoreachedRMB128,913,313,of

whichMr.Zongdirectlyandindirectly(throughShanghaiMaimingandShanghaiZhuao,our

employeincentiveplatformscontroledbyMr.Zong)heldanagregateofaproximately42.75%

equityinterests,withtheremaining57.25%equityinterestsheldby38otherShareholders.

ConversionintoaJointStockLimitedCompanyandA-SharesListing

OnNovember17,2020,ourpredecesorwasconvertedfromalimitedliabilitycompanytoa

jointstocklimitedcompanyunderthenameofSICo.,Ltd.(山东天岳先进科技股份有限公司)

withtheregisteredsharecapitalofRMB386,739,939.TheshareholdingstructureofourCompany

HISTORY,DEVELOPMENTANDCORPORATESTRUCTURE

---

remainedthesameaftertheconversion,withMr.Zongdirectlyandindirectly(throughShanghai

MaimingandShanghaiZhuao)holdingaproximately42.75%Sharesand38othershareholders

holdingtheremaining57.25%Shares,respectively.

OnJanuary12,2022,wecompletedthelistingofourASharesontheSTARMarket(stock

code:688234).DuringtheA-SharesListing,weisuedanagregateof42,971,105AShares,

acountingfor10%ofourCompany’sthensharecapitalimediatelyuponcompletionofthe

A-SharesListing.AspartoftheA-SharesListing,weconductedastrategicplacingthroughwhich,

amongothers,2.10%ofthetotaloferedAShares(representing0.21%ofourtotalsharecapital

uponcompletionoftheA-SharesListing)werealocatedtoacolectiveasetmanagementscheme

managedandcontroledbytheasetmanageratitsowndiscretion(“ColectiveAset

ManagementScheme”),whichsubscribedforsuchASharesfortheconomicbenefitsofour

certainseniormanagementmembersandkeyemployes

.TheasetmanageroftheColective

AsetManagementSchemeisShanghaiGuotaiJunanSecuritiesAsetManagementCo.,Ltd.(上海

国泰君安证券资产管理有限公司),aprofesionalasetmanagerandanIndependentThirdParty,

whichisawholy-ownedsubsidiaryofGuotaiHaitongSecuritiesCo.,Ltd.(国泰海通证券股份有

限公司),acompanylistedontheStockExchange(stockcode:02611)andtheShanghaiStock

Exchange(stockcode:601211).Pursuantotheasetmanagementagrement,theasetmanageris

entitledto,amongothers,manageandoperatetheunderlyingasetsandmakeinvestmentdecisions

independentlyaswelasexerciserelevantshareholder’srightsinitsowname,thusistheactual

controleroftheColectiveAsetManagementScheme.

UponcompletionoftheA-SharesListing,theregisteredsharecapitalofourCompany

reached429,711,044Shares,ofwhichaproximately38.48%wasdirectlyandindirectly(through

ShanghaiMaimingandShanghaiZhuao)heldbyMr.Zong.Inacordancewiththeundertaking

providedbyMr.ZongduringtheA-SharesListingandrelevantrequirementsoftheASharerules

andregulations,theASharesdirectlyandindirectlyheldbyMr.Zongimediatelybeforethe

A-SharesListingweresubjectoalock-uperiod,whichasexpiredonJuly12,2025.

EstablishmentofEmployeShareholdingPlatforms

Inordertoatractexperiencedtalents,maintainastableR&Dandmanagementeamand

enhancethetechnologicalinovationcapabilityoftheGroup,from2019to2020,ourCompany

establishedShanghaiMaimingandShanghaiZhuaoasouremployeshareholdingplatforms,with

aviewtoprovidingequityincentivesfortheligiblemployestoaligntheirinterestswithour

Group.

1ThevotingrightsatachedtotheASharesheldundertheColectiveAsetManagementSchemearexercisedby

theasetmanageroftheColectiveAsetManagementScheme,anIndependentThirdParty,atitsowndiscretionin

acordancewiththetermsoftheColectiveAsetManagementScheme.

HISTORY,DEVELOPMENTANDCORPORATESTRUCTURE

---

ShanghaiMaiming

ShanghaiMaimingwasestablishedasalimitedpartnershipunderthelawsofthePRCon

April17,2019.AsoftheLatestPracticableDate,Mr.Zong,ourchairman,executiveDirectorand

generalmanageristhesolexecutiveandgeneralpartnerandholdsaproximately0.01%

partnershipinterestsinShanghaiMaiming,withtheremaininginterestsheldbyMr.Zhong

Wenqing,ourseniormanagementmember(astoaproximately11.67%),ShanghaiJuepeng

EnterpriseManagementCenter(LimitedPartnership)(上海爵芃企业管理中心(有限合伙)

(“ShanghaiJuepeng”)(astoaproximately76.64%)andShanghaiCehuiEnterpriseManagement

Center(LimitedPartnership)(上海策辉企业管理中心(有限合伙)(“ShanghaiCehui”)(asto

aproximately11.67%).ShanghaiJuepengandShanghaiCehuihavebenestablishedtomanage

theadministrativeafairsoftheunderlyingincentiventitlements,whichavenointentionto

indirectlyexercisethevotingrightsofourCompanybutonlytoenjoyeconomicbenefits.

ShanghaiJuepengwasestablishedasalimitedpartnershipunderthelawsofthePRCon

December20,2019.AsoftheLatestPracticableDate,Mr.Zongheldaproximately0.02%

partnershipinterestsandservesasthesolexecutiveandgeneralpartner.Theremaininginterests

ofShanghaiJuepengareheldbyMr.GaoChao,ourexecutiveDirectorandchieftechnology

oficer(astoaproximately16.92%),Mr.WangJunguo,ourexecutiveDirectorandjointcompany

secretary(astoaproximately5.08%),Ms.ZhangHongyan,ourSupervisor(astoaproximately

3.38%),Mr.SongJian,ourSupervisor(astoaproximately3.38%),Mr.DouWentao,our

Supervisor(astoaproximately5.08%),Mr.ZhongWenqing,ourseniormanagementmember(as

toaproximately2.01%)and41otheremployes

ofourGroupwhenthestockincentive

arangementswereimplemented,whoarenotDirectors,Supervisorsorseniormanagement

members(astoaproximately64.13%inagregate).

ShanghaiCehuiwasestablishedasalimitedpartnershipunderthelawsofthePRCon

January13,2020.AsoftheLatestPracticableDate,Mr.Zongheldaproximately0.11%

partnershipinterestsandservesasthesolexecutiveandgeneralpartner.Theremaininginterests

ofShanghaiCehuiareheldbyMr.ZhongWenqing,ourseniormanagementmember(asto

aproximately5.44%)and33otheremployes

ofourGroupwhenthestockincentive

arangementswereimplemented,whoarenotDirectors,Supervisorsorseniormanagement

members(astoaproximately94.44%inagregate).

ShanghaiZhuao

ShanghaiZhuaowasestablishedalimitedpartnershipunderthelawsofthePRConMay5,

2019.AsoftheLatestPracticableDate,Mr.Zong,ourchairmanoftheBoard,executiveDirector

andgeneralmanager,isthesolexecutiveandgeneralpartnerandholdsaproximately0.02%

partnershipinterestsinShanghaiZhuao,withtheremaininginterestsheldbyMr.ZhongWenqing,

HISTORY,DEVELOPMENTANDCORPORATESTRUCTURE

---

ourseniormanagementmember(astoaproximately20.90%),Mr.GaoChao,ourexecutive

Directorandchieftechnologyoficer(astoaproximately23.26%)and44otheremployes

of

ourGroupwhenthestockincentivearangementswereimplemented,whoarenotDirectors,

Supervisorsorseniormanagementmembers(astoaproximately55.81%inagregate).

MAJORACQUISITIONS,DISPOSALSANDMERGERS

Wehadnotcariedoutanymajoracquisitions,disposalsormergersduringtheTrackRecord

PeriodanduptotheLatestPracticableDate.

LISTINGOFOURASHARESONTHESTARMARKETANDREASONSFORTHE

LISTINGONTHEHONGKONGSTOCKEXCHANGE

SinceourlistingontheSTARMarketonJanuary12,2022andasoftheLatestPracticable

Date,ourDirectorsconfirmedthatwehadnoinstanceofmaterialnon-compliancewiththerules

oftheShanghaiStockExchangeandotheraplicablesecuritieslawsandregulationsofthePRCin

anymaterialrespects,and,tothebestknowledgeofourDirectorshavingmadealreasonable

enquiries,therewasnomaterialmaterthatshouldbebroughtotheinvestors’atentioninrelation

tourcompliancerecordontheSTARMarket.Basedontheindependentduediligenceconducted

bytheJointSponsors,nothinghascometotheJointSponsors’atentionthatwouldcausethemto

disagrewithourDirectors’confirmationwithregardtothecompliancerecordsoftheCompany

ontheSTARMarket.BasedonthefilingrecordsonthewebsiteoftheShanghaiStockExchange

andtheinformationavailableinthepublicdomain,ourPRCLegalAdvisorisoftheviewthathe

aboveconfirmationofourDirectorswithregardtourcompliancerecordontheSTARMarketis

acurateandreasonable.

InlinewithourCompany’soveraldevelopmentstrategyandoperationalneds,our

CompanysekstobelistedontheHongKongStockExchange.Thismoveaimstoacelerateour

internalizationandoverseasbusinesexpansion,enhanceourabilitytosecurefundingfrom

internationalmarkets,andfurtherbolsterourcapitalstrengthandcompetitivedge.Se“Busines

—OurStrategies”and“FuturePlansandUseofProceds”formoredetails.

SuchotheremployesincludecoretechnologytalentsandkeytechnologyandbusinespersonelofourGroup

whenthestockincentivearangementswereimplemented,noneofwhomareDirectors,Supervisorsorsenior

managementmembersofourCompany.

HISTORY,DEVELOPMENTANDCORPORATESTRUCTURE

---

PUBLICFLOATANDFREFLOAT

SatisfactionofthePublicFloatRequirement

Rule8.08(1)(asamendedandreplacedbyRule19A.13A)oftheListingRulesprovidesthat,

whereanewaplicantisaPRCisuerwithotherlistedsharesathetimeoflisting,thiswil

normalymeanthatheportionofHsharesforwhichlistingisoughthatareheldbythepublic,

athetimeoflisting,must(a)representatleast10%oftheisuer’stotalnumberofisuedshares

intheclastowhichHsharesbelong(excludingtreasuryshares);or(b)haveanexpectedmarket

valueofnotlesthanHK$3,000,000,000.

OurASharesarelistedontheSTARMarket.ThetotalnumberoftheHSharestobeisued

pursuantotheGlobalOferingrepresentsaproximately10.00%ofthetotalisuedsharecapital

ofourCompany(beforeanyexerciseoftheOver-alotmentOption).Imediatelyfolowingthe

completionoftheGlobalOfering(beforeanyexerciseoftheOver-alotmentOption),thetotal

numberoftheHSharesexpectedtobeheldbythepublicrepresentsaproximately10.04%ofthe

totalisuedsharecapitalofourCompany(excluding2,005,884ASharesrepurchasedbyour

CompanyastreasurysharesasoftheLatestPracticableDate),whichishigherthantheprescribed

percentageofHSharesrequiredtobeheldinpublichandsof9.90%underRule19A.13A(2)(b)of

theListingRulescalculatedbasedontheOferPriceofHK$42.80perHShare,therebysatisfying

Rule8.08(1)(asamendedandreplacedbyRule19A.13A)oftheListingRules.

SatisfactionoftheFreFloatRequirement

Rule8.08A(asamendedandreplacedbyRule19A.13C)oftheListingRulesprovidesthat,

whereanewaplicantisaPRCisuerwithotherlistedsharesathetimeoflisting,thiswil

normalymeanthatheportionofHsharesforwhichlistingisoughthatareheldbythepublic

andnotsubjectoanydisposalrestrictions(whetherundercontract,theListingRules,aplicable

lawsorotherwise),athetimeoflisting,must:(a)representatleast5%ofthetotalnumberof

isuedsharesintheclastowhichHsharesbelongathetimeoflisting(excludingtreasury

shares),withanexpectedmarketvalueathetimeoflistingofnotlesthanHK$50,000,000;or

(b)haveanexpectedmarketvalueathetimeoflistingofnotlesthanHK$600,000,000.

EachoftheCornerstoneInvestorshasagredtoalock-uperiodofsixmonthsfolowingthe

ListingDate.Asuch,HSharesheldbytheCornerstoneInvestorsupontheListingshalnotbe

countedtowardsthefrefloatoftheHSharesoftheCompanyathetimeofListing.Basedonan

OferPriceofHK$42.80perHShare,beingthemaximumOferPrice,theCompanywilsatisfy

thefrefloatrequirementunderRule8.08A(asamendedandreplacedbyRule19A.13C)ofthe

ListingRules.

HISTORY,DEVELOPMENTANDCORPORATESTRUCTURE

---

OURSHAREHOLDINGANDCORPORATESTRUCTURE

ShareholdingandCorporateStructureImediatelyBeforetheGlobalOfering

ThefolowingchartdepictsashareholdingandbeneficialownershipstructureofourGroup

imediatelypriortothecompletionoftheGlobalOfering(asumingthatnochangesaremadeto

theisuedsharecapitalofourCompanybetwentheLatestPracticableDateandListing):

Shanghai

Tianyue

Shanghai Yuefu

Tianyue New

Material

Shanghai

Yuelianfeng

Shanghai

Maiming

(1)(2)

Mr. Zong

(1)(2)

Shanghai

Zhuao

(1)(2)

Other A

Shareholders

Our Company

Jining New

Material

Beijing Tianyue

SIC GLOBAL

(Japan)

100%

SKY SPUR

INVESTMENT

(Hong Kong)

(3)

Shanghai

Zhuhuan

100%

100%

30.09%5.38%3.00%61.53%

100%100%100%100%100%100%

Notes:

(1)Se“—EstablishmentofEmployeShareholdingPlatforms”inthisectionfordetails.

(2)Mr.Zong,asthesolexecutiveandgeneralpartnerofeachofShanghaiMaimingandShanghaiZhuao,is

responsibleformanagementandexercisingthevotingrightsatachingtotheSharesheldbyeachofShanghai

MaimingandShanghaiZhuao,inacordancewiththepartnershipagremententeredintoamongthegeneraland

limitedpartnersofeachofShanghaiMaimingandShanghaiZhuao,respectively.Therefore,Mr.Zong,Shanghai

MaimingandShanghaiZhuaoareconsideredasaControlingShareholderGroupasdefinedundertheHongKong

ListingRules.

(3)TheCompanyalsoindirectlyandwholyownseveraloverseasubsidiariesthroughSKYSPURINVESTMENT,

includingVISIONARYHORIZON,SICEuropeGmbH,SICMalaysiaHoldingsInc.,SICMalaysiaSdnBhd

andVHInvestmentInc.

HISTORY,DEVELOPMENTANDCORPORATESTRUCTURE

---

ShareholdingandCorporateStructureImediatelyFolowingtheGlobalOfering

ThefolowingchartdepictstheshareholdingandbeneficialownershipstructureofourGroup

imediatelyfolowingthecompletionoftheGlobalOfering(asumingthatheOver-alotment

OptionisnotexercisedandthatnochangesaremadetotheisuedsharecapitalofourCompany

betwentheLatestPracticableDateandListing):

Shanghai

Tianyue

Shanghai

Maiming

(1)(2)

Mr. Zong

(1)(2)

Shanghai

Zhuao

(1)(2)

Other A

Shareholders

H Shareholders

Our Company

SIC GLOBAL

(Japan)

100%

27.08%4.85%2.70%55.37%10.00%

Shanghai Yuefu

100%

Tianyue New

Material

100%

Shanghai

Yuelianfeng

100%100%

Beijing Tianyue

100%100%

Jining New

Material

100%

SKY SPUR

INVESTMENT

(Hong Kong)

(3)

Shanghai

Zhuhuan

100%

Notes(1)to(3):Pleaserefertothedetailscontainedintheprecedingpages.

HISTORY,DEVELOPMENTANDCORPORATESTRUCTURE

---

OVERVIEW

WhoWeAre

Weareacompanywithstrongexpertiseinthewidebandgapsemiconductormaterial

industry,focusingontheresearch,developmentandindustrializationofSiCsubstratesinceour

inception.AcordingtoFrost&Sulivan,basedonrevenuefromSiCsubstratesalesin2024,we

rankedamongthetopthreglobalSiCsubstratemanufacturerswithamarketshareof16.7%.

OurSiCmaterialsempowertherenewablenergyandAIsectors,whicharedrivingfuture

technologicaladvancements.OurSiCsubstratescanbeapliedacrosvariousectors,including

electricvehicles,AIdatacenters,photovoltaicsystems,AIglases,railtransportation,powergrids,

householdapliancesandadvancedtelecomunicationbasestations.Leveragingourtechnological

inovationcapabilities,robustmasproductioncapacity,productportfolio,colaborativecosystem

withupstreamandownstreamarketparticipantsandeficientmanagement,weareathe

forefrontoftherapidlyadvancingSiCindustry.AcordingtoFrost&Sulivan,asofMarch31,

2025,wewereoneofthefewcompaniesintheworldcapableofmasproducing8-inchSiC

substrates,oneofthefirstocomercializeSiCsubstratesrangingfroma2-inchtoan8-inch

diameter,andthefirstointroduce12-inchSiCsubstrates.

Wehavestablishedourselvesasakeysupliertoglobalyrecognizedsemiconductor

companies,andourproductshavegainedwidespreadrecognitioninternationaly.AsofMarch31,

2025,wehadestablishedbusinesrelationshipswithoverhalfofthetoptenglobalpower

semiconductordevicemanufacturersintermsofrevenuein2024.Ourcustomersprimarilyutilize

ourSiCsubstratestomanufacturepowerdevicesandradiofrequencydevices,whichareultimately

apliedtoendproductsinsectorsuchaselectricvehicles,AIdatacentersandphotovoltaic

systems.

DedicatedtoSiCmaterialsforover14years,weareoneofthefirstcompaniesinChinato

achievetheindustrializationofbothsemi-insulatingandconductiveSiCsubstrates.Leveragingour

capabilitiesinR&D,productionandmanagement,wehavecontinuouslysolidifiedouradvantage

inproductscaling.TheSiCsubstratesthatwemasproducedhavevolvedfroma2-inchtoan

8-inchdiameter.In2024,weintroducedtheindustry’sfirst12-inchSiCsubstrate.Beyondscaling

thediameterofourSiCsubstrates,wecontinuetomaintainleadershipinindustrialization

capabilitiesandproductquality.Bydrivingproductscalingandproductioneficiency,wenable

ourcustomerstocontinuouslyreducethecostsofusingSiCsubstrates,therebyaceleratingthe

adoptionofSiCsubstratesinmoreaplicationscenarios.

BUSINES

---

AsoftheLatestPracticableDate,wehadmasteredcoretechnologiesencompasingevery

stageofSiCsubstrateproduction,includingequipmentdesign,thermalfieldesign,powder

synthesis,crystalgrowth,substrateprocesingandqualityinspection.Ourproprietary

technologicaltolkithasenabledustoachievehighstandardsinproductdefectcontrolandcost

optimization.

OurMilestones

Throughoutourjourney,wehaveconsistentlydemonstratedourcomitmentoinovation

andtechnologicaladvancementintheSiCindustry.Ourleadingpositionishighlightedbyour

milestones,spaningfromproductdevelopmentomarketrecognition.

Foundedin2010,wesucesfulyachievedthemasproductionof4-inchSiCsubstratesand

6-inchSiCsubstratesin2015and2021,respectively.In2022,wewerelistedontheSTAR

Market,andbecamethefirstwidebandgapsemiconductormaterialcompanylistedinChina.In

2023,weachievedthemasproductionof8-inchSiCsubstrates.In2024,weintroducedthe

industry’sfirst12-inchSiCsubstrate.Inrecognitionofourcapabilitiesandinvestmentvalue,our

stockwasincludedinprominentindicesuchastheSTARMarket50IndexandtheMSCIChina

ASharesOnshoreIndex.

OurResults

DuringtheTrackRecordPeriod,weachievedrapidgrowthinrevenueandsucesfuly

transitionedfromanetlostoanetprofitposition.Ourevenueincreasedby199.9%from

RMB417.0milionin2022toRMB1,250.7milionin2023,andincreasedby41.4%from

RMB1,250.7milionin2023toRMB1,768.1milionin2024.Ourevenuedecreasedby4.2%

fromRMB426.1milioninthethremonthsendedMarch31,2024toRMB408.0milioninthe

thremonthsendedMarch31,2025.Intandemwithourapidgrowthinrevenueandbenefiting

fromourtechnologicalcapabilitiesandeficientmanagement,ourgrosmarginalsodemonstrated

consistentimprovement.Ourgroslosmarginwas7.9%in2022whilewehaveachieveda

turnaroundwithgrosmarginof14.6%in2023and24.6%in2024.Ourgrosprofitmarginwas

21.5%inthethremonthsendedMarch31,2024and22.7%inthethremonthsendedMarch31,

2025.In2022and2023,werecordednetlosesofRMB175.7milionandRMB45.7milion,

respectively,buthavesucesfulyachievedaturnaroundin2024withanetprofitofRMB179.0

milion.InthethremonthsendedMarch31,2024and2025,werecordednetprofitsofRMB46.1

milionandRMB8.5milion,respectively.

BUSINES

---

OurMarketOportunities

SiCmaterialsposesextensivemarketpotentialduetotheirexceptionalproperties.SiC

materialsofersignificantadvantagesovertraditionalsilicon-basedmaterials,includinghigh

temperatureandvoltageresistance,highbreakdownelectricfieldstrength,superiorthermal

conductivityandhighelectronsaturationvelocity.ThedownstreamaplicationsforSiCmaterials

arediverse.ConductiveSiCsubstratesareprimarilyusedinpowersemiconductordeviceswith

widespreadaplicationsinelectricvehicles,AIdatacenters,photovoltaicsystems,rail

transportation,powergridsandhouseholdapliances.Semi-insulatingSiCsubstratesareprimarily

usedinradiofrequencysemiconductordevicesfortelecomunications.Beyondsemiconductors,

SiCmaterials,withtheirsuperioropticalproperties,rapidsoundpropagationandhighthermal

conductivity,alsohasignificantmarketpotentialinAIglases.

Benefitingfromtheirexceptionalproperties,SiCmaterialsplayacrucialroleinempowering

therenewablenergyandAIsectors,whichareleadingfuturetechnologicalrevolutions.SiC

materialsesentialyserveasaneficiencyamplifierinthefieldofrenewablenergy,andarevital

for(i)electricvehicleautomotivecomponents;(i)chargingstations;(i)photovoltaicsystems;

and(iv)powergrids.SiCmaterials’highswitchingsped,lowconductionlos,highvoltage

resistanceandhighthermalconductivityenhancenergyconversioneficiency,extendequipment

lifespanandenablemorecompactcomponentdesigns.Astheglobalrenewablenergyindustry

expands,thedemandforSiCmaterialsisexperiencingexponentialgrowth.SiCmaterialsarealso

aninevitablechoiceforgrowthandinovationintheAIindustry,withvastpotentialindata

centers,powerinfrastructureandend-useraplications.Therapidgrowthofcomputingpower

requiredforAIdevelopmentisdramaticalyincreasingenergyconsumptionindatacenters.SiC

powersemiconductordevices,knownfortheirhigheficiencyandlowenergyconsumption,can

significantlyreducepowerconsumptionindatacentersandimprovenergyutilizationeficiency.

Thenergydemandsoflarge-scaledatacentersarealsoplacinghigherequirementsonpowergrid

capacity,whereSiCpowerdevicescanefectivelyenhancethestabilityofpowerinfrastructure.As

such,SiCmaterialsarepoisedtoreplicatetheirsucesinthelectricvehiclesectorandbecomea

foundationalmaterialforthedevelopmentofdatacenters.Aditionaly,SiCmaterialscanbeused

invariousAIend-useraplications,suchasopticalwaveguidelensesforAIglases.

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DuetothebroadaplicationsofSiCmaterialsandtheirimensemarketpotential,theSiC

materialmarketistransitioningtoanexplosivegrowthphase.Acrucialfactorinincreasing

downstreamdemandforSiCmaterialsistheongoingenhancementoftheirperformanceandthe

optimizationoftheircost.SiCmaterialsarepoisedtoreplacesiliconinthepowersemiconductor

field.ThefolowingsetsforthsomeoftherepresentativeaplicationsofSiCmaterials:

(cid:129)ElectricVehicles.SiCsubstratesareutilizedinmotordrives,OBCs,DC/DCconverters,

airconditioningcompresors,high-voltagePTCheaters,pre-chargerelaysandcharging

stationpowermodules.ThemarketpotentialofourSiCsubstratesisubstantialdueto

theprojectedgrowthinglobalelectricvehiclesales,upgradeofelectricvehiclesto

high-voltagesystems.AcordingtoFrost&Sulivan,theSiCpowerdevicemarketfor

electricvehiclesisexpectedtoreachUSD14.7bilionby2030,withaCAGRof36.1%

from2024to2030.

(cid:129)AIDataCenters.SiCmaterialsareprimarilyutilizedindatacenterpowersuplyunits

(PSUs).Duetotheirhigheficiencyandlowenergyconsumption,SiCpower

semiconductordevicescanefectivelyreducepowerconsumptioninAIdatacentersand

improvenergyutilizationeficiency.AcordingtoFrost&Sulivan,thecapacityof

globalAIdatacentersisprojectedtogrowto299GWby2030,representinganet

increaseof244GWascomparedto2023andaCAGRof27.4%betwen2023and

2030,whichisexpectedtodirectlydrivethepowerconsumptionofdatacentersasa

percentageofglobalelectricityconsumptionfrom1.4%in2023to10.0%in2030.The

corespondingmarketsizeforPSUsthatadoptSiCpowersemiconductordevicesinthe

AIdatacentersectorisprojectedtoexcedRMB80.0bilionby2030.

(cid:129)PhotovoltaicSystems.SiCsubstratesareutilizedininverters,bostconvertersand

energystorageconverterswithinphotovoltaicsystems.Theyenhancenergyconversion

eficiency,reduceswitchinglosesandminimizesystemsizeandweight.Acordingto

Frost&Sulivan,thepenetrationrateofSiCpowersemiconductordevicesinthisector

isprojectedtoincreasefrom9.7%in2024to20.4%in2030.

(cid:129)AIGlases.SiCmaterialscanbeutilizedintheopticalwaveguidelensesforAIglases.

TherefractiveindexofSiCmaterialsisignificantlyhigherthanhigh-refractiveglas

andlithiumniobate,whichalowsforawiderfieldofviewandsimplerful-color

displaystructuresthatcouldreducethesize,weight,manufacturingcostandcomplexity

ofAIglases,therebygreatlyenhancingtheuserexperienceofAIglases.Leveraging

thexceptionalopticalpropertiesofSiCmaterials,theAIglasesectorisexpectedto

haveatremendousgrowthwithglobalshipmentvolumexceding60milionpairsby

2030.

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(cid:129)PowerGrids.SiCpowersemiconductordevices’exceptionalthermalperformanceand

electricalcharacteristicscanimprovetheficiencyandstabilityofpowergrids,andare

crucialfordrivingsolid-statetransformersandflexibleAC/DCtransmisioninpower

grids.SiCpowersemiconductordevicesalsohavelowerconductionresistanceand

switchingloses,whichcansignificantlyimprovenergyconversioneficiencyinpower

conversionsystems.AcordingtoFrost&Sulivan,thepenetrationrateofSiCpower

semiconductordevicesinpowergridsisprojectedtogrowfrom4.2%in2024to14.6%

in2030.

TheimportanceofsubstratematerialsintheSiCsemiconductorindustryismorepronounced

comparedtothesilicon-basedsemiconductorindustry.Duetothecomplexityandhighdemands

forstablemasproductionofSiCsubstrates,manufacturerscapableofconsistentlyproducing

high-qualitySiCsubstratesarecriticalfortheadvancementofthesemiconductorindustry.

AcordingtoFrost&Sulivan,thesizeofglobalSiCsubstratemarketintermsofrevenuefrom

SiCsubstratesalesgrewfromRMB3.0bilionin2020toRMB8.8bilionin2024,withaCAGR

of29.9%from2020to2024,andisprojectedtoreachRMB58.5bilionin2030withaCAGRof

37.1%from2024to2030.

Similartothedevelopmentofsilicon-basedsemiconductorwafers,scalingSiCsubstrate

diameteristrendingintheSiCindustry.Forinstance,an8-inchSiCsubstrateyieldsnearly90%

morediescomparedtoa6-inchsubstratefora32m

diearea,withedgediepercentagereducing

from14%to7%,significantlyincreasingthecost-efectivesofSiCmaterials.Thistrendwil

aceleratetheadoptionofSiCpowersemiconductorsinelectricvehicles,AIdatacenters,

photovoltaicsystems,powergridsandhouseholdapliances.ContinuousenlargementofSiC

substrateswilalsoenablelarge-scaleaplicationsofSiCmaterialsinconsumerelectronicslikeAI

glasesandsmartphones.Companieswithadvantagesinproducinglarge-diameterSiCsubstrates

arepoisedtocapturemarketoportunitiesandleadindustrydevelopment.

AnothercriticaltrendintheSiCindustryisthefurtherconsolidationofmarketparticipants,

whereSiCsubstratecompanieswithglobalyleadingcustomersenjoysignificantstrategic

advantages.Typicaly,SiCsubstratecompaniesuplySiCsubstratestosemiconductor

manufacturers,whothensuplypowerandradiofrequencysemiconductordevicesthatadoptSiC

substratestoendproductmanufacturers.AcordingtoFrost&Sulivan,thetoptenglobalpower

semiconductordevicemanufacturersintermsofrevenuealreadycapturedover50%ofthemarket

sharesin2024.Theseglobalyleadingpowersemiconductormanufacturersimposextremely

stringentqualificationrequirementsontheirsupliers.Ononehand,SiCsubstrates,asakey

materialforsemiconductordevices,mustgothroughcomplexvalidationprocesesinvolving

epitaxy,chipmanufacturingandpackaging/testingbeforetheycanbeapliedtoendproducts;

giventhelengthyverificationcycles,powersemiconductormanufacturersaretypicalyreluctanto

changetheirqualifiedSiCsubstratesupliers,creatingahighentrybarierfornewcomers.Onthe

BUSINES

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otherhand,endproductmanufacturersgeneralyprefertoprocuresemiconductordevicesfrom

globalyleadingpowersemiconductormanufacturers.SiCsubstratecompaniesthatsuplytosuch

powersemiconductormanufacturerscanproactivelyadresend-users’fedbackandundertake

continuousproductupgrades,alowingthemtosteadilyacumulateadvancedmanufacturing

know-howandproprietarytechnologies.Furthermore,leadingcustomershavecleareroadmapsfor

largerSiCsubstratesandposesamplecapitaltodrivesustainedinovation.Thiscolaboration

helpsleadingSiCsubstratecompanieskepupwithindustrytechnologyadvancement,elevating

theircapabilitiestomaintainacompetitivedgeintheglobalmarket.

OURSTRENGTHS

ALeaderDrivingtheComercializationofSiCMaterials

WearealeaderintheglobalSiCindustrywithstrongtechnicalcapabilitiesacrosthentire

productionchain.AcordingtoFrost&Sulivan,werankedamongthetopthreglobalSiC

substratemanufacturersintermsofrevenuefromtheSiCsubstratesalesin2024withamarket

shareof16.7%.Sinceourinception,wehavestrategicalydevelopedandcomercializedboth

conductiveandsemi-insulatingSiCsubstrates.Utilizingthetechnicalexpertisegainedfromour

productdevelopment,wehaveswiftlybroughtomarketadiversearayofSiCsubstrates

featuringvarioustypesandiameters.Wehaveachievedthemasproductionof8-inchSiC

substratesandarethefirstintheworldtointroduce12-inchSiCsubstrates.

WedrivetheadvancementoftheglobalSiCindustry.Proactivelyadresingthesurging

demandsfromtherenewablenergyandAIsectors,wehavecontinuouslylaunchednewproducts

andpromotethewidespreadadoptionofSiCmaterialsbydownstreamendproducts.The

large-diameterSiCsubstratesthatweintroducedareaceleratingthepenetrationofSiCmaterials

acrosdownstreamaplications,suchaselectricvehicles,AIdatacenters,photovoltaicsystems

andpowergrids.AcordingtoFrost&Sulivan,wewereoneofthefewglobalmarketparticipants

capableofmasproducing8-inchSiCsubstrates,andthefirstintheworldtointroduce12-inch

SiCsubstrates.Mostrecently,wehavebecomethefirstodeliverlow-resistivityP-typeSiC

substrates,producedusingtheliquidphasemethod.Aditionaly,wearecolaboratingwithleading

globalconsumerelectronicsbrandstoexploretheaplicationofSiCmaterialsinAIglasesand

smartphones,aimingtopenetratebroaderdownstreamarkets.

LeveragingourestablishedtechnologicaladvantagesandrobustindustrialpresenceintheSiC

industry,weareconsistentlyincreasingourmarketshareandearningthetrustofmoreglobaly

leadingcustomers.AsofMarch31,2025,wehadestablishedbusinesrelationshipswithoverhalf

oftheglobaltoptenpowersemiconductordevicemanufacturersintermsofrevenuein2024.

BUSINES

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TechnicalBariersandInovationSuportedbyOurForward-thinkingR&DStrategiesand

Capabilities

ThroughstrategicR&Dplaningandconsistentinvestment,wehavestablishedadvanced

R&DcapabilitiesalongwithacomprehensiveunderstandingofSiCproperties.Recognizingthe

potentialwithintherenewablenergysector,weremainededicatedtothedevelopmentof

conductiveSiCsubstratesandhavebecomeakeysuplierformajorpowersemiconductor

manufacturers.WerecognizethatherisingdemandforSiCmaterialsiscloselylinkedtoSiC

substratecompanies’abilitytocontinuouslyoptimizecost-efectivenes.Asaresult,wehave

investedsubstantialyintechnologytoproducelargerSiCsubstratediameters,becomingthefirst

globalytointroducetheindustry’sfirst12-inchSiCsubstrate.OurtechnicalsuperiorityinSiC

substratespositionsusatheforefrontofaplyingSiCmaterialstobroaderaplicationscenarios,

aceleratingtheaplicationofSiCmaterialsindatacenters,powergridsandemerging

technologiesandaplications,suchasAIglases.

Wehavedevelopedcoretechnologiescoveringalproductionstagestomaintainaleading

positionintheindustry:(i)inthepowderpreparationstage,wedevelopedin-houseahighvacum

powdereactionchamberandesignedspecializedreactionprocesestocontroltheconcentration

ofmajorelectricalyactiveimpuritiesandnitrogen;(i)inthecrystalgrowthstage,throughthe

crystalgrowthequipmenthatwedevelopedin-house,weachievedauniformthermalfield

structurethatimprovescrystalqualityandproductioneficiencybydesigningcruciblesand

insulation;leveragingoursystematicdefectcharacterizationandcontroltechnologies,we

efectivelyreducedefectdensities,includingmicropipes,polytypeinclusionsandislocations;and

(i)inthesubstrateprocesingstage,basedonextensivesubstrateprocesingdatacumulated

overtime,wedevelopedmulti-blocksplicingmulti-wireslicingtechnologytovercomethe

chalengeofbalancingsticklengthwithslicingquality,optimizedtherheologicalpropertiesof

slicingfluidandthemorphology,sizeandistributionofabrasivestosignificantlyreducesurface

damageofslicedwafers,andevelopedafulsuiteofgrindingandpolishingprocesestoachieve

smothandhighlyflatpolishedSiCsurfaces.Ourtechnologicalcapabilitiesalowustoprecisely

controltheperformanceofourSiCsubstrates,achievenear-zeromicropipesintheSiCsubstrates

thatweproduce,increaseproductioneficiencyandreduceprocesingcostswhilensuring

consistentsubstratequality.

WeplacesignificantemphasisonprotectingourR&Doutcomesbytransformingthe

aforementionedcoretechnologiesintointelectualproperties,therebyestablishingourtechnical

bariers.AsoftheLatestPracticableDate,wehadbengranted503patents,including198

inventionpatents,14ofwhichweregrantedforinventionsinregionsoutsidemainlandChina.We

alsosecuredthefirstISO56005-basedLevel3certificatefor“InovationandIPManagement

Capability”amongwidebandgapsemiconductormaterialmanufacturersinChina,highlightingour

achievementsinR&Dandintelectualpropertymanagement.

BUSINES

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Beyondpatentransformation,ourcoretechnologieshavecrystalizedintoaproprietary

know-howsystem.Forinstance,relyingonthestresquantificationtechnologythatwedeveloped

in-house,weachievequantitativestrescharacterizationofSiCsubstrates,enablingpropercontrol

andcontinuousimprovementoftheproductionproces.Thisalowsforprofoundcontrolover

substratequalitytopreventisuesuchaswaferwarping,defectproliferation,devicefailure,and

opticalmirorlaticedeformation.

OurR&Dacomplishmentsareprimarilyatributedto(i)oureficientsales-R&D-production

synergymechanism,underwhichweintegratedownstreamcustomers’nedsintour

forward-thinkingR&DefortstoensurethatheresultsofourR&Darecomunicatedpromptly

andefectivelytourproductiondepartment;and(i)ourvibrantandstableR&Dcenterthat

consistedof154membersasofMarch31,2025,over40%ofwhomholdadoctoralormaster’s

degre.ToensurehighstabilityoftheR&Dcenterandfurtherincentivizeinovation,weofer

equityincentivestourR&DcentermembersasofMarch31,2025.

RobustMasProductionCapabilitiesforHigh-Quality,EficientandStableDelivery

Throughyearsofindustryimersionandacumulationofprocesexperience,wehave

achievedbreakthroughsthatalowustorapidlyincreaseourproductioncapacity.AsofMarch31,

2025,wehadestablishedtwoproductionplantsinShandongandShanghaiwithanagregate

anualdesignproductioncapacityofover400,000piecesofSiCsubstratesfor2024.

Ourproductioncapacityiscomplementedbyourextensiveproductionmanagementexpertise

thatensuresthequalityofourSiCsubstrates.Weactivelyimplementleanproductionprinciples,

developstandardizedproductionprocesesandintroduceadvancedautomationandsmart

equipmentominimizehumanintervention,enhancingthestabilityandreliabilityofproduction

proceses.Weconsistentlymonitor,analyzeandimproveourproductionproceses,andourobust

productionmanagementcapabilitiesenableustoleadtheindustryinlarge-scaledelivery.

Ourproductioncapacityisevidentinourabilitytomasproducelarge-diameterSiC

substratesandensurequalityconsistencywhileimprovingcrystalgrowththicknes,ensuringlow

defectandintegratingsmartmanufacturingtometdownstreamarketdemands.

BUSINES

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AbilitytoMasProduceLarge-diameterSiCSubstratesandEnsureQualityConsistency.

Benefitingfromourproductionmanagementeamwithstrongexecutioncapabilitiesand

forward-lokingstrategicplaning,weareleadinginthemasproductionof8-inchSiCsubstrates.

Ourproductionmanagementeamhascumulatedcomprehensivexperiencefromfacility

constructiontothestablemasproductionoflarge-diameterSiCsubstrates.TakingourShanghai

productionplantasanexample,itbeganequipmentinstalationinJanuary2023,achievedproduct

deliveryinMayandreachedananualproductioncapacityof300,000piecesofSiCsubstratesin

thefirsthalfof2024,atargetinitialysetfor2026.Intermsofstrategiclayout,wepremptively

conductediferentiatedesignofcrystalgrowthequipmentoacomodatetheproductionof

both8-inchand6-inchSiCsubstrates.Withtheriseofdemandsfor8-inchSiCsubstratesinrecent

years,ourfactorycouldswiftlyswitchfromproducing6-inchto8-inchSiCsubstrates.Our

flexibleproductioncapabilitiespositionusadvantageouslyunderthetrendofscalingSiCsubstrate

diameter.

Wexcelinotonlytheproductionqualitybutalsothequalityoflarge-diameterSiC

substrates,andwensurequalityconsistencyduringtheproductionoflarge-diameterSiC

substrates.Thisguarantesthequalityofmas-deliveredSiCsubstratesandasurestabledelivery

forourglobalcustomers.Inadition,basedonthefedbackthatwereceivedfromourcustomers,

wecancontinuouslyiterateandimproveourproductionprocesof8-inchSiCsubstrates,thereby

solidifyingourcompetitiveadvantage.

ImprovementinCrystalGrowthThicknes.IncreasingthefectivethicknesofSiCingots

cansavetheusageofcostlySiCsedcrystalandsignificantlyreduceproductioncostsby

increasingsubstrateyieldperingotintheproductionproces.Nevertheles,theimprovementof

efectivethicknespresentsnumerouschalenges,suchasmaintainingthermalfieldstabilityin

growthchambersamidincreasedthicknesandsourcepowderconsumption.Wehaveovercome

thesechalengesandasuredconsistencyacrosdiversecrystalgrowthequipmenthrougheficient

productionmanagement.AsoftheLatestPracticableDate,ourSiCsubstrateshadachievedan

industry-leadingefectivethicknesofover60mascomparedtotheindustryaverageof

aproximately20m.

HighYieldandLowDefect.OurSiCsubstrateshaveachievednear-zeromicropipesas

manifestedbynostackingfaults,lowbasalplanedislocation(BPD)densityoflowerthan100

cm

-2

ascomparedtotheindustryaverageoflowerthan800cm

-2

,lowthreadingscrewdislocation

(TSD)densityof0cm

-2

ascomparedtotheindustryaverageoflowerthan300cm

-2

,andlow

threadingedgedislocation(TED)densityoflowerthan500cm

-2

ascomparedtotheindustry

averageoflowerthan2,000cm

-2

.WehavefurtherdevelopedandimplementedaZero-DefectPlan,

aimingforhigh-qualityproductsandefect-fredelivery.

BUSINES

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SmartProduction.Weprioritizesmartandautomatedproduction.Ononehand,smartfactory

canmitigaterisksarisingfromhumanintervention,whichiscrucialforthepreparationof

high-qualitySiCsubstrates.Ontheotherhand,ahighlevelofautomationcanefectivelyoptimize

laborcostsinproduction.TakingourShanghaiproductionplantasanexample,itwasdesignedas

asmartfactory.Therefore,itisequipedwithigh-performancesmartequipmentandits

productionprocesiscontinuouslyoptimizedthroughAIandigitaltechnologies.InourShanghai

productionplant,weutilizeinformationsystemstoachievereal-timeanalysis,monitoringand

earlywarningofproductionquality,andwehavedigitalizedkeyproductionstages,suchas

procescontrol,datacolectionandoperation.Bydeployingroboticsystemandsmartequipment

units,wehaveautomatedfurnaceignitionandloading,proceselectionaswelasoperation

controlandmanagement,achievingunmanedoperationinourcrystalgrowthfacilities.

ContinuouslyExpandingandHigh-PerformanceProductPortfoliotoSuportDownstream

Aplications

Wehaveacontinuouslyexpandingandhigh-performanceproductportfoliothatalowsusto

exploreandadvancethedownstreamaplicationsofSiCsubstratesacrosvariousindustries.

Weactivelyengageinproductinovationinresponsetothevolvingdownstream

aplications,positioningustoseizemergingmarketoportunities.Forinstance,westrategicaly

positionedourselvesinthelectricvehiclesectorandobtainedtheIATF16949certificationfor

automotivestandardsin2022.OurSiCsubstrateshaveundergonerigorousvalidationbyleading

powersemiconductormanufacturers,enablingustobecomeoneoftheirmajorsupliers.

Leveragingourforward-lokingandcomprehensivetechnologicalframeworkalongsideourstrong

andagileinovationcapabilities,ourSiCsubstrateshavesucesfulydepenedpenetrationin

certainpromisingsectors,includingrenewablenergyandAI,whichnotonlydrivesthegrowthin

ourevenuebutalsohelpsusexpandownstreamaplicationscenarios,therebysolidifyingour

industry-leadingpositionandpositioningustocapturenewdevelopmentoportunities.

Wearecomitedtodeliveringhigh-performanceSiCsubstratestourcustomers.Wehave

adresedchalengesrelatingtonucleationuniformityandthemergenceofdefects,suchas

micropipesandpolytypeinclusions,underlarge-diameterthermalfieldsthroughtechnological

inovationandoptimizedcrystalgrowthproceses.Thishasresultedinhigh-quality

automotive-gradeSiCsubstratesthatfeaturexcelentsurfacemorphology,highflatnesandlow

roughnes,whichwerewidelyrecognizedbyourcustomers.In2023,wewerehonoredwiththe

“SuplierApreciationAward”byaworld-leadingautomotivequipmentmanufacturer.

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ColaborativeEcosystemwithCustomersandSupliersthatPropelstheAdvancementofthe

SiCIndustry

WearedeplyintegratedintothevaluechainoftheSiCindustryandhavebuilta

colaborativecosystemwithbothupstreamandownstreamarketparticipants.Anchoredbyour

technologycapabilities,weswiftlyrespondtoandfulfilcustomers’nedswithoursuplychain

resourcesworldwide.Thisefortaceleratestheadoptionoflarge-diameterSiCsubstratesproducts

acrosvariousectorsandfostersmutualbenefitsforthentireindustry,thusenhancingourglobal

influence.Furthermore,wearededicatedtocreatingathrivingecosystemwithintheSiCindustry

throughinovationandcolaboration,particularlyinkeysectorsofrenewablenergyandAI,

furtherbroadeningdownstreamaplicationsandpropelingtheadvancementoftheSiCindustry.

Withrespectourcustomers,wehave(i)implementedtheBrandTouch-PointsPlanto

ensurethatourcustomersformlastingmemoriesandimpresionsofourbrandwithevery

interactiontheyhavewithus;(i)establishedaglobalsalesandservicenetworkthatcoversChina,

EuropeandJapantoprovidetimelyresponsestovariousbusinesdemandsfromourglobal

customers;and(i)builtacloselyconectedecosystemwithourcustomersfromtheirdesign-in

stage.Onceourcustomersachieveadesign-win,ourpartnershipisetobecomevenmorerobust

andentrenched.Leveragingourtechnologicaladvantages,exceptionalproductqualityandstrong

deliveryandcustomerservicecapabilities,wehavemaintainedrobustandlong-termcoperation

withleadingcustomers.AsofMarch31,2025,wehadestablishedbusinesrelationshipswithover

halfoftheglobaltoptenpowersemiconductordevicemanufacturersintermsofrevenuein2024.

AcordingtoFrost&Sulivan,SiCsubstrates,esentialforsemiconductordevices,mustundergo

complexvalidationprocesesincludingepitaxy,chipmanufacturingandpackaging/testing,before

beingapliedtoendproducts.Duetothelengthyverificationcycles,powersemiconductor

manufacturersaregeneralyhesitantochangetheiraprovedSiCsubstratesupliers.Inadition,

ourSiCsubstrateshavebenadoptedbycompaniesintherenewablenergyandAIsectors.This

enablesustocolectfedbackandoptimizeourSiCsubstratesandservicestometendcustomers’

requirements,therebyfurtherenhancingcustomerloyalty.Asteadygrowthinrevenuecontribution

fromprominentinternationalcustomersandourstrategicemphasisoncateringtodownstream

industriesthatdemandproductsofsuperiorqualityhavealowedustomaintainfinancialresilience

whilescalingouroperationsignificantly.WeactivelypromotethewideraplicationofSiC

materialsindownstreamarketstoexploremergingbusinesoportunities.Thisisexemplified

byourecentinvestmentinafiltermaterialcompany.

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Wehavedevelopedstrongrelationshipswithrenownedsupliersandhaventeredinto

long-termstrategicprocurementagrementstoensurethestablesuplyofkeyrawmaterials.

DuringtheTrackRecordPeriod,weprocuredrawmaterialsfromdiversifiedsuplysources,which

notonlyensuresthestablesuplyofourawmaterialsbutalsoenhancesouroveralprofitability.

Thelong-termprocurementframeworkagrementsthatwenteredintowithourmajorsupliers

outlinetheprocurementpricesandsuplyvolumesforacertainperiod,whichefectivelyreserves

aportionoftheirproductioncapacity,ensuringthatheycanprovideuswithcompetitivelypriced

rawmaterialsthatsuportourmasproduction.Aditionaly,wecolaboratewithoursuplychain

partnerstoshareindustryinsights,exchangetechnicalideasandconductcoperativedevelopment,

whichleadtoanupgradeinkeyrawmaterialsandupstreamequipmentintheSiCindustry.

VisionaryandExperiencedManagementTeamwithaCompetitiveMindset

Ourfoundingandexecutiveteamiscomprisedofindustryleaderswhoarebothvisionaryand

experienced,posesingexceptionalstrategicforesightandextensiveindustrymanagement

expertise.Mr.ZongYanmin,ourfounder,chairmanandgeneralmanager,hasyearsofresearchand

industrializationexperienceintheSiCindustry.Hisprofoundunderstandingoftheindustryand

visionaryaproachtotechnologicalinovationhaveprovidedcriticalguidanceforourstrategic

development.Dr.GaoChao,ourChiefTechnologyOficer,hadbengrantedover30patentsas

theleadinventorasoftheLatestPracticableDate.AfoundingmemberofourCompany,Dr.Gao

hasledtheR&Dcentertoachievenumerouscriticaltechnologicalbreakthroughs.Ourcore

managementeamposesesdepinsightsintoglobalindustrydevelopmentrendsandcustomer

neds,enablingthemtosterourbusinestowardsfinancialsuces,asdemonstratedbyour

historicalperformance.

Benefitingfromthextensivexperiencebroughtbyourmanagementeam,wehave

establishedasolidtrackrecordinsucesfulproductdevelopmentandmasproduction.Their

abilitytoadaptoaconstantlychangingoperationalenvironmentandexecutestrategicinitiatives

iscrucialtodrivingourgrowth.Aditionaly,weadheretothephilosophyof“CultivatingTalent

andExcelence,”fosteringadiverseandvibrantR&Dcenterthroughthestablishmentof

comprehensivetalentdevelopment,incentiveandpromotionmechanisms.AsofMarch31,2025,

ourR&Dcenterconsistsof154fromvariousdisciplines,includingmaterialscience,electronic

enginering,physics,chemistryandmechanicalenginering,withaproximately40%holdinga

doctoralormaster’sdegre.Thiscreativeteamsuportsourtechnologicalinovationandproduct

iteration.

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OURSTRATEGIES

MaintainingInovationLeadershiptoAceleratetheAdoptionofSiCMaterials

AsaleaderintheSiCindustry,wearededicatedtoaceleratingtheadoptionofSiC

materialsindownstreamaplicationsandestablishingastableSiCecosystemworldwideby

leveragingourtechnologicalstrengthsandin-depthintegrationintotheglobalsemiconductor

market.Ouradvancedtechnology,productioncapabilities,andeficientmanufacturingproceses

enableustocontinuereducingtheoveralcostofSiCsubstrates.Thiswildrivethe

comercializationofhigh-performanceSiCsubstratesacrosvariousaplicationscenariosand

increasetheirpenetrationinthepowersemiconductormarket.

OurcomitmentliesinpioneringtheintegrationofSiCmaterialsacrosboththerenewable

energyandAIsectors,recognizingtheirpivotalroleinshapingfuturetechnologicaladvancement.

Specificaly,weplantocontinuepromotingtheadoptionofSiCmaterialsinestablishedsectors,

suchaselectricvehicles,powergrids,railtransportationandhouseholdapliances,while

simultaneouslyworkingonachievingtechnologicalbreakthroughsinemergingfieldsuchasAI

datacenters,AIglasesandadvancedheatdisipationcomponents.

EnhancingR&DCapabilities,OptimizingTechnicalLayoutandEnrichingProductPortfolio

WewilcontinuetoenhanceourR&Dcapabilitiesandenrichourpatentportfoliotosolidify

ourpositionasatechnologyleaderintheSiCindustry.Specificaly,weplanto(i)focusonthe

studyofmaterialproperties,crystalgrowththermodynamics,crystalgrowthmethodsaswelasthe

mechanismsofcrystaldefectformationandevolution;(i)conductintensivexperimentsincore

technicalareasrelatingtomaterialperformance,crystalgrowthandefectcontroltobreakthrough

technicalbotlenecksandrefinemanufacturingprocesesofSiCmaterials;(i)strengthenour

R&DcapabilitiesacrosSiCsubstratesofvarioustypesandspecifications,andreinforceour

technologicaladvantagesinareasuchaslarge-diameterproductiontechnology,zero-defect

technology,P-typesubstratetechnologyandliquidphasetechnologytoimprovematerial

performanceandfacilitateproductupgrades;and(iv)developnext-generationtransformative

technologiestofacilitatetheadoptionofSiCsubstratesinvariousemergingsectors.

Wewilremaincomitedtoin-houseR&Dbycontinuouslyrecruitingtop-tiertalentand

providingourR&Dpersonelwithampleresources.Leveragingourobustechnologicalplatform

andacumulatedexpertise,wewilensurethatourR&Dcenterkepsupwithcuting-edge

technologies,therebyreinforcingourpositionasindustryleaders.Wewilalsocontinuouslyrefine

ourincentivemechanismsandR&Dmanagementsystemstostimulateinovation.Wehave

implementedacomprehensiverewardstructureforR&Dpersonelwhomakesignificant

contributionsintechnologydevelopment,parameterimprovementsandpatentaplications.This

BUSINES

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initiativeaimstofosterenthusiasmwithinourR&Dcenter.Wewilstrengthenourcolaboration

withleadinguniversitiestoprovideasolidfoundationfortechnologicalbreakthroughsandproduct

inovations.

MaintainingandContinuouslyEnhancingOurProductionCapacitytoImproveProduction

EficiencyandDeliveryQuality

Inordertoeficientlyadresthevolvingnedsofourdownstreamcustomers,wewil

persistentlystrengthenourefectiveproductioncapacity,withaparticularfocusonlarge-diameter

SiCsubstrates.Thiswilbeachievedthroughstrategicinvestmentsandthedevelopmentof

state-of-the-artsmartfactories.Thisaproachwilsolidifyourindustry-leadingposition.

Weremaincomitedtocontinuouslyinvestinginourestablishedproductionplantsand

upgradingourtechnologicalcapabilities.Thiswilenableustoptimizeouroveralproduction

capacitiesandeficiencies.Specificaly,weaimto(i)improvethestabilityofoursuplychain;

(i)developequipmentwithtechnologicaleadership;(i)refineproductionprocesestoenhance

equipmentutilizationandmaterialeficiencywhileminimizingproductionwaste;(iv)strengthen

ourdigitaloperationalsystemstoincreasethelevelofautomationinoursmartfactories;and(v)

continueoptimizingengineringparametersandaplycoretechnologies,suchasrapidcrystal

growthandthicknesenhancement,toincreaseproductioneficiencyandreducecosts,achieving

scalableleanproduction.

Athesametime,wewilcontinueimplementingourZero-DefectPlanandenhanceboth

deliveryqualityandeficiency.Ononehand,wewilmakeconcertedefortstoprovideSiC

substratesthatseamleslymethevolvingrequirementsofourcustomersthroughdedicatedand

extensivecomunications.Ontheotherhand,wewilestablishstringentqualitycontrolstandards

ateachstageofthemanufacturingprocestoensurethehighqualityandconsistencyofourSiC

substrateswhilemaintainingouradvantageintimelyandeficientdelivery.

StrengtheningGlobalColaborativeEcosystem,ExpandingCustomerBaseandDepening

CustomerRelationships

WearecomitedtoestablishingamutualybeneficialSiCecosystemthroughcolaboration

withupstreamsupliersandownstreamcustomersintheindustry.Weaimtoexpandthemarket

size,advancetheadoptionofSiCmaterialsandleadthedevelopmentoftheSiCindustryonboth

thetechnologicalandaplicationfronts.

Wearecomitedtobolsteringourlong-termstrategicpartnershipswithbothupstream

supliersandownstreamcustomers.Athesametime,wewilexpandourcustomerbaseinboth

thedomesticandinternationalmarkets.Thisaproachisdesignedtoincreaseourbusinescale

BUSINES

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andenhanceourglobalmarketshare.Bydepeningcolaborationswithglobalyleading

companies,weaimtoshapeindustrytrendsandstrengthenourmarketposition.These

colaborationswilenableustojointlydefineproductprocesesandsuplychainstandards,

aceleratecomercializationofnewtechnologiesandenhancetheperformanceandcost

optimizationofourexistingoferings,ultimatelyincreasingourmarketpenetration.Concurently,

wewilseknewcustomeracquisitionsandexpandintonewaplications,whichiscrucialforour

sustainablegrowthandmarketexpansion.Inadition,wearededicatedtorefiningourglobalsales

andservicesystem,whichwilalowustomorefectivelyidentifyandmethenedsofboth

domesticandinternationalcustomers,improveouresponsetimesandcustomersatisfactionlevels,

andoptimizeourdeliverycosts.Byadoptingthiscomprehensiveaproach,weaimtosolidifyour

positionasacustomer-centric,globalycompetitiveSiCsubstratecompany.

Wearealsocomitedtostrengtheningourpartnershipswithglobalyleadingrawmaterial

andequipmentsupliers.Thistrategicaproachisdesignedtoensurestablesuplychainsand

maintainourcostadvantages.Weaimtocontinuouslyenhancematerialandequipment

performancewhileoptimizingproductioncoststhroughcolaborationwithoursupliers.

Furthermore,wewilactivelydevelopadiversified,multi-tieredsuplierpol,whichwilalowus

todepenourmultifacetedglobalrawmaterialprocurementnetwork,enhancingoursuplychain

resilienceandflexibility.

ContinuouslyAtractingTopTalentandEnhancingManagementCapabilities

Weplacegreatimportanceoncultivatingourtalentpol.Weplantobuildaspecializedteam

withinovationcapabilities,strongteamworkskilsandtheagilitytoadaptochangingmarket

dynamicstoenhanceourtechnologicalinovationcapacities,strengthenouroveral

competitivenesandsuportoursustainablelong-termgrowth.

Wewilcontinuetoincreaseinvestmentinourtalentacquisitionstrategies.Ononehand,

alignedwithourstrategicprioritiespaningR&D,production,salesandmanagement,wewil

implementcomprehensivetalentacquisition,trainingandevelopmentprogramstostrengthenour

talentpipeline.Ontheotherhand,wewilactivelybroadenourtalentacquisitionchanelsby

colaboratingwithrenowneduniversities.Wewilenhanceourstrategictalentdevelopment

mechanismsbyestablishingadiferentiatedtrainingsystemtailoredtorolerequirementsto

empowerthecultivationofkeypersonelacrosdomains.Wewilalsomaintainapositive

workingenvironment,implementcomprehensiveperformancevaluationandprovidecompetitive

incentivestoencouragecontinuousvaluecreationandfosterbusinesinovation,therebyfurther

enhancingourtechnologicalstrengthandinovativevitality.

BUSINES

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Wewilconsistentlyimproveandoptimizeourorganizationalmanagementsystemtodevelop

astructurealignedwithourcorporatedevelopmentstrategyandsuitedtourapidlyexpanding

businescale.Thiswilenhanceourmanagementcapabilitiesesentialforservinglobal

customersandproviderobustasuranceforscientificandeficientoperationalmanagement.We

wilalsocontinuetoimproveouroperationaleficiencyinprocurementmanagement,inventory

management,salesmanagementandigitaloperations.

PursuingStrategicInvestments,PartnershipsorAcquisitions

Toenhanceourtechnologicalcapabilitiesandexpandourbusinesfotprint,weplanto

engageinstrategicinvestments,partnershipsoracquisitionsinthefuture.Wewilprimarilytarget

technologies,teams,asetsorcompaniesinthesemiconductorindustrythatarecomplementaryor

synergistictous.Throughstrategicinvestments,partnershipsoracquisitions,weplantoimprove

ourtechnologies,refineourproductionproceses,enhanceourproductquality,expandoursales

networkandbroadenouracesiblemarkets,therebydrivingourfuturegrowth.AsoftheLatest

PracticableDate,wehadnotidentifiedanyinvestment,partnershiporacquisitiontarget.

OURPRODUCTS

Overview

Wearealeaderintheproductionofwidebandgapsemiconductormaterials,focusingonthe

research,developmentandindustrializationofSiCsubstratesinceourinceptionin2010.

TherenewablenergyandAItechnologyrevolutionshavesignificantlytransformedglobal

industries,drivinganincreasedemandformorepowerfulandeficientpowersemiconductor

devices.Traditionalsiliconsemiconductorsarehardtomethedemandsarisingfromindustry

upgradesduetotheirinherentlimitations,promptingthesemiconductorindustrytosekmaterials

thatofergreatereficiency,durabilityandperformance.Amongtheseinovations,SiCmaterials

havemergedasagame-changer,revolutionizingvariousindustrieswithitsexceptionalproperties.

SiC,acompoundwidebandgapsemiconductormaterial,oferseveraladvantagesovertraditional

silicon:ithas(i)awiderbandgap,enablingoperationathighervoltages,frequenciesand

temperatures;(i)superiorthermalconductivity,idealforaplicationswithsubstantialthermal

loads;(i)higherbreakdownelectricfieldstrength,alowingforthinerdeviceswithlower

on-resistance;and(iv)higherelectronsaturationvelocity,suportingfasterswitchingspeds.

ThesepropertiesenhancetheperformanceofendproductsusingSiCsubstrates,alowingthemto

operateathighertemperatures,voltagesandfrequencieswhilemaintainingexcelenteficiency.

Thisresultsinimprovedpowerdensity,reducedenergylosesandenhancedreliabilityin

BUSINES

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electronicomponentsandsystems.Consequently,ridingthewavesofthesurgingdemandsfrom

therenewablenergyandAIsectors,inovativewidebandgapsemiconductormaterials

representedbySiChaveasignificantimpactonthesemiconductorindustry.

Wefocusontheresearch,developmentandproductionofSiCsubstrates.AcordingtoFrost

&Sulivan,wewereoneofthefewglobalmarketparticipantscapableofmasproducing8-inch

SiCsubstrates.Leveragingourin-houseR&Dcapabilities,wemasteredthecoretechnologies

coveringalstagesofSiCsubstrateproduction,includingequipmentdesign,thermalfieldesign,

powdersynthesis,crystalgrowth,substrateprocesingandqualityinspection.Thisenabledour

masproductionof8-inchSiCsubstratesin2023,overcomingthechalengesofhigh-quality

growthinterfacecontrolandefectcontrolintheproductionofSiCsubstrates.InNovember2024,

weintroducedtheindustry’sfirst12-inchSiCsubstrate,whichmarksasignificantstepintothera

oflargeSiCsubstrates.ThefolowingpictureilustratesoursampleSiCsubstrates:

DedicatedtoSiCsubstratesforover14years,wearecomitedtoprovidingourcustomers

withigh-qualitySiCsubstrates.Throughtechnologicalinovation,wecontinuouslyenhancethe

performanceofourcustomers’productsacrosdiverseindustries.DuringtheTrackRecordPeriod,

weprimarilyofered4-inch,6-inchand8-inchSiCsubstrates,andwewereoneofthefew

companiesworldwidethatcouldoferbothconductiveandsemi-insulatingSiCsubstratesin

variousdiameters.

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DuringtheTrackRecordPeriod,wemainlyderivedourevenuefromsalesofconductiveSiC

semiconductormaterialandsemi-insulatingSiCsemiconductormaterial.Thefolowingtablesets

forthourevenuebreakdownbyproductypeinabsoluteamountandasapercentageofourtotal

revenue,fortheperiodsindicated:

YearendedDecember31,ThremonthsendedMarch31,

Amount%Amount%Amount%Amount%Amount%

(RMBinthousands,exceptforpercentages)

(unaudited)

SalesofSiCsemiconductor

material

ConductiveSiCsemiconductor

material

.

168,32840.4977,62478.21,340,72775.8304,37571.4259,06463.5

Semi-insulatingSiC

semiconductormaterial

.

157,69137.8108,1788.6132,9617.528,9506.870,20417.2

Sub-total

.

326,01978.21,085,80286.81,473,68883.3333,32578.2329,26880.7

Others

(1)

.

91,01621.8164,89413.2294,45316.792,74321.878,69319.3

Total

.

417,035100.01,250,696100.01,768,141100.0426,068100.0407,961100.0

Note:

(1)Othersprimarilyinclude(i)otherSiCproductsthatdonotmetsemiconductor-gradespecificationsacordingto

ourinternalclasificationstandards,suchasmoisanitegemstones,whichareprimarilyusedinresearchand

customergodsaplication,and(i)rentalincome.

Thefolowingtablesetsforthabreakdownofoursalesvolumebyproductypeforthe

periodsindicated:

YearendedDecember31,ThremonthsendedMarch31,

Piece%Piece%Piece%Piece%Piece%

ConductiveSiCsemiconductor

material

.

35,35555.4197,04687.1324,23889.877,38490.977,50179.3

Semi-insulatingSiC

semiconductormaterial

.

28,44044.629,25612.936,95310.27,7769.120,22220.7

Total

.

63,795100.0226,302100.0361,191100.085,160100.097,723100.0

BUSINES

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Oursalesvolumeofsemi-insulatingSiCsemiconductormaterialincreasedsignificantlyfrom

7,776inthethremonthsendedMarch31,2024to20,222piecesinthethremonthsendedMarch

31,2025,primarilyatributabletotheincreasedpurchasevolumesfromCustomer3andCustomer

11asaresultoftheirisingdemandforadiofrequencyelectronicomponents.

Thefolowingtablesetsforthabreakdownofouraveragesalespricebyproductypeforthe

periodindicated:

YearendedDecember31,ThremonthsendedMarch31,

(RMBperpiece)

ConductiveSiCsemiconductormaterial

.

4,7614,9614,135

(1)

3,9333,343

(1)

Semi-insulatingSiCsemiconductormaterial

.

5,5453,698

(2)

3,5983,7233,472

Notes:

(1)AcordingtoFrost&Sulivan,thedecreasesfromRMB4,961perpiecein2023toRMB4,135perpiecein2024

andfromRMB3,933perpieceinthethremonthsendedMarch31,2024toRMB3,343perpieceinthesame

periodof2025wereinlinewiththeindustrytrend.TheindustryaveragesalespriceofconductiveSiC

semiconductormaterialdecreasedfromRMB3.3thousandtoRMB5.3thousandperpiecein2023toRMB2.7

thousandtoRMB4.7thousandperpiecein2024,fromRMB2.5thousandtoRMB4.5thousandperpieceinthe

thremonthsendedMarch31,2024toRMB2.2thousandtoRMB4.2thousandperpieceinthesameperiodof

2025,primarilyduetoimprovementsinproductioneficiency,intensifiedmarketcompetition,androbustsuply

availability.

(2)AcordingtoFrost&Sulivan,thedecreasefromRMB5,545perpiecein2022toRMB3,698perpiecein2023was

inlinewiththeindustrytrend.Theindustryaveragesalespriceofsemi-insulatingSiCsemiconductormaterial

decreasedfromRMB4.0thousandtoRMB6.2thousandperpiecein2022toRMB3.5thousandtoRMB4.9thousand

perpiecein2023,primarilyduetoimprovementsinproductioneficiency,intensifiedcompetitionandslowing

demandgrowthindownstreamarkets.

AsofMarch31,2025,wehadestablishedbusinesrelationshipswithoverhalfoftheglobal

toptenpowersemiconductordevicemanufacturersintermsofrevenuein2024.AcordingtoFrost

&Sulivan,intermsofrevenuefromSiCsubstratesalesin2024,werankedamongthetopthre

globalSiCmanufacturerswithamarketshareof16.7%.

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DuringtheTrackRecordPeriod,wealsosoldotherSiCproductsthatdonotmet

semiconductor-gradespecificationsacordingtourinternalclasificationstandards,suchas

moisanitegemstones,whichareprimarilyusedinresearchandconsumergodsaplications,to

ourcustomers.

Aplications

SiCsubstratesexhibitexceptionalelectricalandphysicalproperties,whichmakethem

particularlysuitableforawidespectrumofaplications.

ConductiveSiCsubstrates’high-temperatureresistance,high-voltagenduranceandhigh

switchingspedenablepowersemiconductormanufacturerstocreatesmaler,moreficient,more

resilient,moreversatilelectronicdeviceswithigherfunctionalintegrationthantraditional

silicon-basedones.DuringtheTrackRecordPeriod,ourconductiveSiCsubstrateswereprimarily

usedtomanufacturerpowersemiconductordevicesthatareadoptedinelectricvehicles,AIdata

centers,photovoltaicsystems,railtransportation,powergridsandhouseholdapliances.

Semi-insulatingSiCsubstrates’highresistivity,lowleakagecurent,highthermal

conductivityandhighresistancetoradiationmakethemparticularlyvaluableinhigh-frequency

andhigh-powerelectronicaplicationswheresignalintegrityandeficiencyareparamount.

Semi-insulatingSiCsubstratescanbeprocesedintoradiofrequencydevices,whichplaytherole

ofsignalconversionintelecomunicationandarefundamentalcomponentsoftelecomunication

equipment.DuringtheTrackRecordPeriod,oursemi-insulatingSiCsubstrateswereprimarily

adoptedbyendproductsinthetelecomunicationindustry,suchasadvancedtelecomunication

basestations.

Inadition,thexceptionalopticalandacousticpropertiesofourSiCmaterialsmakethem

idealforconsumerelectronics,suchasopticalwaveguidelensesinAIglases.

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TheilustrationbelowsumarizesourSiCsubstrates’aplicableindustriesandthend

productsthatadopthem.

ElectricVehicles

ElectricvehiclemanufacturerscanbenefitfromtheadoptionofourSiCsubstratesdueto

theirsuperiorelectricalproperties,whichenablegreatereficiencyandperformanceinpower

devices.OurSiCsubstratesaremainlyusedinelectricvehicles’motordrives,on-boardchargers

(OBCs)andDC/DCconverters.AcordingtoFrost&Sulivan,powermodulesthatadoptourSiC

substratescan(i)improvethenergyconversioneficiencyofmotordrivesandsignificantly

reducenergylosesby70%to90%,therebyincreasingtherangeofelectricvehicles,and

maintainstablehigh-poweroutputinhigh-temperaturenvironments,therebysuportinghigher

ratedvoltages;(i)enhanceOBCs’chargingeficiencyandenablehigh-voltagefastcharging,

therebyshorteningthechargingtimeofelectricvehiclesandultimatelyimprovingtheuser

experienceforelectricvehicleowners;and(i)increasethenergyconversioneficiencyof

DC/DCconvertersandreducenergylosesby80%to90%,therebyimprovingoveralelectrical

energyutilizationeficiencyandminimizingtheimpactofon-boardelectronicdevicepower

consumptiononelectricvehiclerange.ByadoptingourSiCsubstrates,electricvehicle

manufacturerscanproducemoreficient,reliableandcost-efectivevehicles.AcordingtoFrost

&Sulivan,theSiCpowerdevicemarketforelectricvehiclesisexpectedtoreachUSD14.7bilion

by2030,withaCAGRof36.1%from2024to2030,andthepenetrationrateofSiCpower

semiconductordevicesinelectricvehiclesisprojectedtoincreasefrom19.2%in2024to53.6%in

2030.

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AIDataCenters

TheadoptionofourSiCsubstratespresentsexcitingoportunitiesforAIdatacenters.The

rapidgrowthofcomputingpowerequiredforAIdevelopmentisdramaticalyincreasingenergy

consumptioninAIdatacenters.AcordingtoFrost&Sulivan,datacentersareprojectedto

acountforaproximately10%ofglobalelectricityconsumptionby2030.OurSiCsubstratescan

beadoptedintheAC-DCstageinpowersuplyunitsforAIdatacenterstoreducenergy

consumption,improvecolingsolutionsandenhancepowerdensityforservers,ultimately

suportingthegrowingdemandforhigh-performanceAIcomputationwithsignificantpower

demands.SiCpowerdevicescanbeutilizedtoconstructhepowerfactorcorection(PFC)circuits

withinpowersuplyunits(PSUs)asanalternativetotheirsilicon-basedcounterparts.Compared

tosiliconpowerdevices,SiCpowerdevicesoferhigherswitchingfrequenciesandlowereverse

recoveryloses,whichcanefectivelyreducethecomponentcount,increasepowerdensityand

enhancethenergyconversioneficiencyofAC-DCpowerstages.TheuseofSiCpowerdevices

inPSUscandrivepowerdensitiestomorethandoublethatofsilicon-basedpowerdevicePSUs,

whileimprovingthenergyconversioneficiencybyuptoaproximately1%atheAC-DCstage.

Inadition,SiC-basedPSUsaremorecompactinsizeascomparedtosilicon-basedPSUs,

enablingAIdatacenterstodeliverhigherpoweroutputwithinexistingrackspace.Acordingto

Frost&Sulivan,thepenetrationrateofSiCpowersemiconductordevicesinAIdatacentersis

projectedtoincreasefrom7.5%in2024to18.3%in2030.

PhotovoltaicSystems

Photovoltaicomponentshavetraditionalyutilizedsilicondevices,butafterover40yearsof

development,theirconversioneficiencyandpowerdensityarenearingtheoreticalimits.OurSiC

substratescanotonlyimprovenergyconversioneficiencyandreduceswitchinglosesfor

photovoltaicomponents,suchasinverters,bostconvertersandenergystorageconverters,but

alsoreducethesizeandconsumptionofpasivecomponents,suchasinductorsandcapacitors,

minimizingoveralsystemcost,weightandvolumetoeasetransportationandinstalation.By

adoptingourSiCsubstrates,photovoltaicompaniescanbenefitfromlowerenergylos,higher

switchingfrequenciesandreducedheatdisipationeds.OurSiCsubstrates’abilitytoperateat

elevatedfrequenciesandtemperaturesenhancespowerconversioneficiency,resultinginmore

efectivesolarenergysystemsthatconvertsunlightintousablelectricitywithimprovedthermal

management.Aditionaly,thedurabilityandsmalersizeofSiC-basedpowerdevicesleadto

loweroperationalcostsandextendedsystemlifespans.Thisultimatelyenhancestheficiency,

reliability,andcost-efectivenesofphotovoltaicsolutions,makingsolarenergymorecompetitive

intherenewablenergymarket.AcordingtoFrost&Sulivan,thepenetrationrateofSiCpower

semiconductordevicesinphotovoltaicsystemsisprojectedtoincreasefrom9.7%in2024to

20.4%in2030.

BUSINES

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AIGlases

Drivenbytheadvancementsinmicrodisplaytechnology,opticaltechnology,AIalgorithms

andthematurationofARsoftwareandcontentecosystems,theglobalAIglasesmarketis

expectedtoexperiencerapidgrowthby2027.DuetoSiCmaterials’significantlyhigherefractive

indexcomparedtohigh-refractiveglasandlithiumniobate,theadoptionofourSiCmaterialsin

themakingofopticalwaveguidelensescanresultinawiderfieldofviewandsimplerful-color

displaystructures.Thiscanleadtoareductioninthesize,weightandcomplexityofAIglases,

significantlyenhancingtheperformanceanduserexperienceofAIglases.AcordingtoFrost&

Sulivan,theaplicationofSiCmaterialsisexpectedtosignificantlydrivethelarge-scale

comercializationofAIglasesintheglobalmarket,andtheshipmentvolumeofAIglasesis

projectedtoexced65.9milionpairsby2030.

RailTransportation

OurSiCsubstratesarecapableofhandlinghighervoltagesandtemperatureswithlower

energyloses,alowingformorefectiveandcompactpowerconversionsystems,suchastraction

converters,usedintrains.Thisresultsinimprovedpowerdensityandreducedoveralweight,

contributingtolowerenergyconsumptionandenhancedspedandreliabilityoftrains.By

incorporatingourSiCsubstrates,railtransportationsystemscanachievehighereficiencyand

increasedoperationalperformance,facilitatingmoreconomicalandsustainablerailoperations.

AcordingtoFrost&Sulivan,thepenetrationrateofSiCpowersemiconductordevicesinrail

transportationisprojectedtoincreasefrom16.7%in2024to36.6%in2030.

PowerGrids

OurSiCsubstratescansignificantlyenhancepowergridsbyimprovingtheficiencyand

capacityofpowertransmisionandistribution.Capableofoperatingathighertemperatures,

voltages,andfrequencies,ourSiCsubstratesenablemorecompactandeficientdevicesuchas

converters,switchgear,andtransformers,reducingenergylosesandimprovingpowerquality.For

instance,athesamevoltageandconversionfrequency,MOSFETinvertersadoptingourSiC

substrateshavesubstantialylowerenergylosesascomparedtosilicon-basedIGBTinverters.Our

SiCsubstrates’highthermalconductivityalsodecreasesheatdisipationandmaintenanceneds,

loweringoperationalcostsandbostingreliability.IntegratingourSiCsubstratesresultsinhigher

eficiency,increasedgridstability,andbetersuportforenewablenergy,fosteringamore

resilientandsustainablenergyinfrastructure.AcordingtoFrost&Sulivan,thepenetrationrate

ofSiCpowersemiconductordevicesinpowergridsisprojectedtoincreasefrom4.2%in2024to

14.6%in2030.

BUSINES

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HouseholdApliances

OurSiCsubstratesaresuitableforawidevarietyofhouseholdapliances,particularly

high-powerones,suchasairconditioners,refrigerators,washingmachinesandelectricovens.

UtilizationofourSiCsubstratesinthePFCcircuits,bostcircuits,motordrivesandhigh-voltage

powersuplies,canenhancethenergyconversioneficiencyofhouseholdapliances,thereby

improvingtheirenergyperformanceandeficiencyandreducinghouseholdelectricity

consumption.Inadition,ourSiCsubstratesenablepowersemiconductordevicestoincreasethe

powerdensityofpowersupliesandreducethesizeofheatsinks,therebydecreasingthevolume

andcostofmagneticomponentsandthermalmanagementpartsofhouseholdapliances,

promotingtheminiaturizationofhouseholdapliances.Takingairconditioners,oneofthelargest

segmentsinthehouseholdaplianceindustry,asanexample,theshipmentvolumeofSiC-based

high-endhouseholdairconditionersisexpectedtosurpas80milionby2030,acountingfor

aproximately30%oftheglobalhouseholdairconditionershipmentvolume.

Advancedtelecomunicationbasestations

AdvancedtelecomunicationbasestationsbenefitfromadoptingourSiCsubstrates.Thelow

radiofrequencylosduetothehighresistivityofourSiCsubstratesimprovestheperformanceof

radiofrequencycomponentsandenablesradiofrequencydevicestoperateathigherfrequencies,

makingSiC-basedGaNanidealchoicefortheadvancedemandsoftelecomunication

technology.Aditionaly,SiC-basedGaNthatusesourSiCsubstratesboastsuperioreficiency

withreducedenergyloses,loweringoperationalcostsandenhancingnetworkperformance.The

highbreakdownvoltagealowstelecomunicationdevicestoperatesafelyathighervoltages,

vitalforthehigh-poweradiofrequencyaplicationsintelecomunicationsystems.Furthermore,

thehighpowerdensityandfrequencycapabilityofSiC-basedGaNenablemorecompactand

eficientpoweramplifiersnededforadvancedtelecomunicationbasestations.Acordingto

Frost&Sulivan,thepenetrationrateofSiCradiofrequencysemiconductordevicesinadvanced

telecomunicationbasestationsisprojectedtoincreasefromaproximately46%in2023to

aproximately66%in2030.

R&D

WearecomitedtoR&Dandinovation.Wehaveinvestedsignificantresourcesintothe

R&DofSiCsubstratesandproductiontechnologies,whichiscrucialforasemiconductormaterial

company.Ourfocuspansfundamentalresearch,productdevelopmentandengineringR&D,

ensuringthatwenotonlykepsupwithtechnologicaladvancementsbutalsocontinualyenhance

ourproductoferings.ThisdedicationtoR&Ddrivesinovationandpositionsustomethe

evolvingdemandsoftheindustry,fortifyingouroleasaleaderinbandgapsemiconductor

materials.

BUSINES

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In2022,2023,2024andthethremonthsendedMarch31,2024and2025,wehadR&D

expensesofRMB127.6milion,RMB137.2milion,RMB141.8milion,RMB22.3milionand

RMB44.9milion,respectively,acountingfor30.6%,11.0%,8.0%,5.2%and11.0%ofour

revenueinthesameyears,respectively.OuroutstandingR&Dacomplishmentsareatestamento

ourobustR&Dcenter.AsofMarch31,2025,ourR&Dcentercomprisedof154dedicated

employeswithexperienceandexpertiseinmaterialscience,physics,chemistryandmechanical

enginering.Over40%ofthemholdadoctoralormaster’sdegre.Byfunction,ourR&Dcenter

canbedividedintofundamentalresearch,productdevelopmentandengineringteams.

OurendeavorsinR&Dhaveresultedinsignificantacomplishmentsasevidencedbyour

intelectualpropertyprofile.AsoftheLatestPracticableDate,wehadbengranted503patents,

including198inventionpatents,14ofwhichwerefromregionsoutsidemainlandChina.

R&DFocusesandProces

OurR&Dprimarilyfocusonthreareas:fundamentalresearch,productdevelopment,and

engineringR&D.

(cid:129)Fundamentalresearch.Ourfundamentalresearchprimarilyconcentratesondeveloping

novelcrystalinematerials,exploringdiferentheoriesandmethodologiesforcrystal

growthandpreparation,developinginovativeaplicationsbasedonphysicochemical

propertiesofmaterials,uncoveringthephysicalcorelationmechanismsbetwencrystal

materialperformanceandtheirstructuralandmanufacturingproceses,andinvestigating

crystalgrowthmechanismsandtheirasociatedthermodynamics.Wealsofocuson

researchingdefectcontrolinsemiconductorcrystalsaswelastheadvanced

characterizationtechniquesandtheoriesforcrystaldefectsandperformance.Through

thiscomprehensiveaproach,weaimtoenhancethequalityandperformanceofour

materials,drivinginovationinsemiconductortechnology.

(cid:129)Productdevelopment.Ourproductdevelopmentprimarilyfocusesonthecreationof

semiconductorcrystalsandthecorespondingsubstrateswithvariousconductivitytypes,

dimensions,performanceandaplications.Bydiversifyingourproductportfolioin

termsofphysicalpropertiesandiameters,weaimtomethespecificnedsof

diferentaplicationsandindustries,suchaselectricvehicles,AIdatacenter,

photovoltaicsystemsandAIglases.Thistargetedaproachnotonlyenhancesour

productportfoliobutalsostrengthensourpositioninthecompetitivesemiconductor

market,ensuringthatwecanprovidetailoredsolutionstourcustomers.

BUSINES

---

(cid:129)EngineringR&D.OurengineringR&Dprimarilyfocusonthecontinuousiteration

andrefinementofourproductiontechnology.Wehaveadedicatedengineringteamthat

isprimarilyresponsiblefor(i)buildingthre-dimensionalequipmentmodels,conducting

fluidynamicsandthermodynamicsdesignandsimulation,andevelopingand

optimizingcrystalgrowthequipmentandthermalfields;(i)softwareandhardware

developmentandthestudyofcrystalgrowthproceses;and(i)technicalrectification

ofqualityisuesincrystalpreparationproceses,aimingtocontinuouslyenhancecrystal

materialqualityandpreparationeficiencywithfedbacktoandcolaborationwith

fundamentalresearchandproductdevelopment.Theadvancementinourproduction

technologydrivestheimprovementincriticalperformancemetricsofourproducts,

includingdefectmetrics,electricalperformanceparametersandproductyield.Our

comitmentotechnologicalevolutionensuresefectivecostmanagement,elevated

productreliabilityandpromotesaplicationdiversification.

WetypicalyconductargetedR&Dtofocusonthepainpointsandnedsofourdownstream

customers,andweoptimizeandimproveourproductsbasedontheirfedback.Thisaproach

enablesourproductstobetersuportheirendproductswhiledepeningthecolaboration

betwenusandourcustomers.OurR&DisledbytheR&Dcenter,operatingunderahierarchical

managementprojectsystemwiththefolowingproceses:(i)ouremployescombineinformation

gatheredfromourdailyoperation,colaborationwithindustryparticipants,marketresearch,and

analysisofcustomerfedback,andsubmitdemandaplicationstotheR&Dcenter;(i)oncethe

demandaplicationisaproved,theR&Dcenterputstogetheradesignatedprojecteamby

selectingaprojectmanagerandteamembers,andtheprojectmanagerisresponsibleforwriting

aprojectaprovalreporthatincludestheprojectname,background,feasibilityanalysis,project

objectivesandfinancialbudget;(i)theprojecteamformulatestheR&Ddesignplanbasedon

theprojectrequirements,detailsthexperimentalplanandschedule,andcompletesthe

experimentalverificationacordingtothedesignplan;(iv)theprojectmanager,basedonthe

projectplanandeliverystatus,determinesifalprojectgoalshavebencompleted,initiatesthe

projectaceptanceaplication,andpreparestheProjectAceptanceReportfortheR&Dcenterto

review;and(v)afterprojectaceptance,theR&DcenterevaluatestheR&Dresultsandtakes

variousmeasurestosafeguardourintelectualpropertyrights.

OurTechnologies

AsoftheLatestPracticableDate,wehadmasteredcoretechnologiescoveringalstagesof

SiCsubstrateproduction,includingequipmentdesign,thermalfieldesign,powdersynthesis,

crystalgrowth,substrateprocesingandinovativematerialqualitycharacterization.Anchoring

oursucesinourproprietarytechnologies,wearecomitedtoindependentR&D,andwehave

formedacomprehensivesystemtoprotectourIPrights.Se“—IntelectualProperty.”

BUSINES

---

DefectControlTechnologyintheSiCrystalGrowthProces

DefectsinSiCmaterialsprimarilyincludemicropipes,polytypeinclusionsandislocations.

Micropipesarethrough-typedefectsrangingfromafewmicronstotensofmicronsinsizeandare

kilerdefectsfordevices.SiCmaterialscontainmorethan200typesofcrystalstructures.To

ensureadesiredcrystalstructureandtoavoidcomondefectslikepolytypeinclusions,the

precisecontrolofvariousparameters,suchastemperature,presureandairflow,isesential.The

thermalstrescausedbythetemperaturegradientintheSiCcrystalgrowththermalfieldandthe

fluctuationsintemperatureandcompositionduringthegrowthprocescanalsointroducedefects

suchasdislocationsandpointdefects,afectingthequalityandperformanceofsubsequentepitaxy

andevices.

Wehave(i)controledtheuniformandorderlynucleationathesedcrystalinterface

throughourdesignofcrystalnucleationproces,achievingthegrowthofsingle4Hcrystalswith

near-zeromicropipedensity;(i)realizedahighlyuniformthermalfieldforcrystalgrowththrough

ourdesignofthermalfieldstructureandcrystalgrowthchamber,efectivelyreducingtheinternal

stresandislocationdefectsinduceduringthecrystalgrowthprocesandsignificantly

improvingthecrystalinequalityofthegrowncrystals;(i)comercializedhigh-qualitySiC

substrateswithscrewdislocationdensitiesbelow100cm

−2

andoptimalqualitycontrolachieving

levelsbelow1cm

−2

throughouresearchonthegenerationandtransformationmechanismsof

threadingdislocationsandinovationindislocationeliminationproceses;and(iv)wehave

achievedpreciseregulationoftheC/SicompositionathegrowthinterfacethroughourC/Si

compositionregulationtechnology,ensuringthecontroloftypeandconcentrationofpointdefects

withinthecrystals.Thesetechnologieshavenabledustorealizestableandcontrolablequalityin

thecontinuousgrowthofhigh-qualitySiCcrystals.

SiCrystalGrowthEquipmentandThermalFieldDesignandManufacturingTechnology

OurSiCcrystalgrowthequipmentadoptsahighvacumsystemstructure,whichcanachieve

anextremelyhighvacumdegrewhilekepinganextremelylowhigh-temperaturevacum

leakagerate,ensuringthepurityofSiCpowderandtheSiCcrystalgrowthchamber.Inadition,

wehavecontinuouslyimprovedtheautomationlevelofourSiCcrystalgrowthequipment,

combinedwiththecrystalgrowthcontrolsoftwaresystem,torealizetheautomaticloading,

furnacesealing,andautomaticontrolbeforecrystalgrowth,aswelasreal-timemonitoringofal

parametersuchasfurnacetemperature,vacumdegre,andgasflowduringthecrystalgrowth

proces,ensuringthestabilityandcontrolabilityofthecrystalgrowthproces.

TheSiCcrystalgrowththermalfieldisthecoreofSiCcrystalgrowth,determiningthekey

reactionconditions,suchastheaxialandradialtemperaturegradientsandthegasphaseflowfield,

inthecrystalgrowth.Thecoreofthermalfieldconfigurationistosetanapropriateaxial

BUSINES

---

temperaturegradientandradialtemperaturegradientoensurethathecrystalsgrowninthe

thermalfieldhaverelativelysmalinherentinternalstresandareasonableandcontrolable

growthrate.OurthermalfieldsimulationandmodelingteamusesprofesionalSiCthermalfield

simulationsoftwareforthermalfieldesign,whichcanperformacuratethermalfieldsimulation,

modeling,andesignfordiferentypesandiametersofSiCcrystaltomethetechnicalneds

ofgrowingcrystals.

High-puritySiCPowderPreparationTechnology

SiCpowderistherawmaterialforSiCcrystalgrowth.Duetotheinfluenceofthesynthesis

environmentandtheinherentandiremovableimpuritiesinrawandauxiliarymaterials,the

synthesizedSiCpowderinevitablyintroducesalargenumberofimpurities,directlyafectingthe

purityandelectricalperformanceofthecrystals.Wehavedevelopedahigh-vacumpowder

reactionchamberusinghigh-puritygraphitethermalinsulationmaterials,andesignedaspecial

reactionprocestobtainSiCpowderparticleswithextremelyhighpuritybycontrolingthe

concentrationofthemainelectricalyactiveimpuritiesinthepowdertobelow0.05pm.In

adition,aftercrushing,screning,andself-developedcleaningproceses,wecanobtainpowder

ofdiferentparticlesizes,ensuringthepreparationofhigh-qualitySiCcrystals.

PreciseImpurityControlTechnologyandElectricalPerformanceControlTechnology

Thelectricalperformanceofsemiconductorsdependsonthetypeandconcentrationof

impuritiesinthesemiconductormaterial.Toharnesthehigh-resistancelectricalcharacteristicsof

semi-insulatingSiCsubstrates,theimpurityconcentrationinthecrystalsnedstobecontroledat

anextremelylowlevel;toharnesthelow-resistancelectricalcharacteristicsofconductiveSiC

substrates,ahighconcentrationofnitrogenelementsnedstobeintroducedintothecrystals.

Therefore,precisecontroloftheimpuritiesthatenterthecrystalsduringthegrowthprocesis

vital.

Basedonthehigh-vacumsinglecrystalgrowthchamberandhigh-puritySiCpowderthatwe

developedin-house,wehavefurtherdevelopedourin-situpurificationtechnologyduringthe

crystalgrowthprocesandC/Sicomponentcontroltechnologyathecrystalgrowthinterface.

Thesetechnologiesefectivelyreducetheimpurityconcentrationinthecrystalsandrealizingthe

controlofdefectypesandconcentrations.Inadition,wedevelopedinovativelectrical

performancecontroltechnologyandachievedtheuniformandstablelow-resistancelectrical

characteristicsofconductiveSiCsubstrates,kepingtheirin-planeresistivityuniformitywithin

2%.

BUSINES

---

Ultra-precisionProcesingTechnologyforSiCSubstrates

Ourultra-precisionprocesingtechnologyconsistsof:

Multi-wireSlicingTechnologyforSiCingotswithHighSurfaceQuality.SiCcrystalhasa

Mohshardnesof9.2,secondonlytodiamond,andisahardandbritlematerial.Wehave

developedasegmentedmulti-wireslicingprocesforlarge-diametercrystals.Basedonspecific

crystaltype,wehavedesignedthemostoptimalfedcurvestoptimizethecrystalsurface

profilesfromentrytoexit,therebyreducingsurfacedamageontheslicedwafers.Wehavealso

formulatedauniqueSiCcrystalslicingfluidcompositionthatsignificantlyimprovingslicing

eficiency.

GlobalGrindingandPolishingTechnologywithHighFlatnesandLowRoughnes.Dueto

thehighlystablephysicalandchemicalpropertiesofSiCcrystal,theficiencyofusingtraditional

semiconductorpolishingmethodsisextremelylow,anditisdificultoensurethesurfacequality.

Throughyearsofresearch,wehavedevelopedSiCgrindingandpolishingproceses,whichcan

ultimatelyproduceasmoth,flatandhighlypolishedSiCsurface.

SiCSubstrateSurfaceCleaningTechnology.Afterchemicalmechanicalpolishing,theSiC

substratesrequirefinalcleaningtoremovesub-micron-scaleparticles,contaminants,andmetal

ionsfromtheirsurfaces.Wehaveindependentlydevelopedachemicalcleaningsolutionanda

multi-stepcleaningproces,whichcanefectivelyremovemicroscopicparticlesandmetalion

contaminationfromsubstratesurface,alowingcustomerstousethemstraightoutofthebox.

LiquidPhaseMethod

Ourliquidphasemethod,unlikeconventionaltechniques,involvesgrowingSiCcrystalsfrom

amoltensilicon-carbonsolution.Thistechniqueprovidesbetercontroloverthegrowth

parameters,alowsforamorehomogeneousdistributionofdopantswithinthecrystal,and

facilitatesthegrowthofSiCcrystalthatareparticularlywel-suitedforhigh-powerand

high-voltagelectronics.Bycarefulymanagingthetemperatureandcompositionoftheliquid

melt,wecanproduceSiCingotswithreducedefects,loweresistanceandlargerdiameters.Our

liquidphasemethodenablesustoproduce8-inchSiCsubstratesfrefromacroscopicdefects.

PRODUCTION

TheproductionofSiCsubstratesencompasesthecrystalgrowthandsubstratefabrication

proceses.Thephysicalvaportransport(PVT)methodisthemostwidelyadoptedtechniqueinthe

industrytodayforSiCcrystalgrowth.InthePVTproces,high-puritySiCpowderisdirectly

vaporizedbyextremelyhightemperaturesunderpreciselycontroledlow-presureconditions.By

BUSINES

---

carefulyregulatingthemolecularmotionwithinthegrowthchamber,thegaseousSiCpowderis

condensedandcrystalizedonasedcrystal,formingalargesingle-crystalingot.Thisingotis

thensliced,ground,polishedandcleanedtocreatethefinalSiCsubstrates.

DuringtheTrackRecordPeriod,weproducedourSiCsubstratesatourownproduction

plantsinShandongandShanghai.Wenableoptimizationandimprovementsacrosaltechnical

facetsbyintegratingourcoretechnologiesthroughouteverystageofcrystalgrowthandsubstrate

procesing.Aditionaly,wearededicatedtometingIATF16949standardsforautomotive-grade

qualityandsafetymanagement.Consequently,ourtechnology-drivenproductionmodelbackedby

robustmanagementsystemenablesoursuplyofhigh-qualitySiCsubstrates.

ProductionPlants

WehadestablishedtheShandongproductionplantandtheShanghaiproductionplant.The

tablebelowsetsforthdetailsofourproductionplantsasofMarch31,2025.

ProductionPlantsLocationGrosFlorAreaPrimaryProducts

(sq.m.)

Shandongproductionplant

.

Jinan&Jining69,732SiCsubstrates

Shanghaiproductionplant

.

Shanghai93,897SiCsubstrates

In2022,2023and2024,ourtotalproductioncapacitywasaproximately75,000pieces,

270,000piecesand420,000piecesofSiCsubstrates,respectively;ouractualproductionwas

aproximately71,000pieces,262,000piecesand410,200piecesofSiCsubstrates,respectively;

ourproductionutilizationratewas94.7%,97.0%and97.6%,respectively.Inthethremonths

endedMarch31,2024and2025,ourtotalproductioncapacitywasaproximately96,800pieces

andaproximately105,600piecesofSiCsubstrates,respectively;ouractualproductionwas

aproximately83,700piecesand84,300piecesofSiCsubstrates,respectively;ourutilizationrate

was86.5%and79.8%,respectively.ThedecreaseinourutilizationratebetwenMarch31,2024

and2025wasprimarilyduetothesubstantialincreaseinproductioncapacitydrivenbyimproving

yieldratesinthesameperiod.

Ourtotalproductioncapacityincreasedfrom75,000piecesin2022to270,000piecesin

2023,andfurtherincreasedto420,000piecesin2024,primarilydueto(i)risingmarketdemand,

necesitatinganexpansionofourproductioncapacitytometcustomerequirements;and(i)our

technologicaladvancements,suchasthecontinuousimprovementofourSiCingots’efective

thicknesandenhancedefectcontrol,whichsimultaneouslyenhancedourproductioncapacity.

Ourtotalproductioncapacityincreasedfrom96,800piecesinthethremonthsendedMarch31,

2024to105,600piecesinthethremonthsendedMarch31,2025,primarilyduetotheimproving

yieldrateofSiCsubstrates.

BUSINES

---

SmartProduction

Ourproductionmodelisbeneficialformetingthediversenedsofourcustomers,improving

on-timedelivery,ensuringconsistentproductquality,andenhancingcustomersatisfaction.Italso

helpsuscontrolourinventorylevelandimproveourcapitalutilizationeficiency.

Wehavedevelopedandimplementedaninformationsystemtofacilitatetheprocesingof

customerordersandtheproductionprocescontrol.Wehavealsointegratedartificialinteligence

digitalsimulationandbigdatatechnologytoautomateourproductionprocesofourSiC

substrates.Ononehand,smartproductioncanmitigaterisksarisingfromhumanintervention,

whichiscrucialforthepreparationofSiCsubstrates.Ontheotherhand,ahighlevelof

automationcanefectivelyoptimizelaborcostsinproduction.AsofMarch31,2025,our6-inch

SiCsubstrateproductionlinehadachievedahighlevelofautomationandour8-inchSiCsubstrate

productionlinehadachievedfulautomation,layingasolidfoundationforourtechnological

upgradesandproductiteration.Takingourautomatedslicinginspectionequipmentasanexample,

wecaninspectover1,000piecesofSiCsubstratesperequipmentdaily,whichsignificantly

surpasedthemanualinspectioneficiency.

ProductionProces

Wearecomitedtothecontinualdevelopmentofproductionprocestechniquestoenhance

manufacturingandproductionmanagementcapabilities.Thediagrambelowilustrateskeystepsof

theproductionprocesofourSiCsubstrates.

SiC

Powder

Sed

Crystal

Growth

Slicing

Grinding &

polishing

Cleaning &

Inspection

BUSINES

---

SetforthbelowaredetailsandexplanationsofkeystepsofourSiCsubstrateproduction

proces:

(cid:129)RawMaterialSynthesis.SiCmaterialsaretypicalysynthesizedfromhigh-puritysilicon

andcarbonpowder.Thereactionusualyocursinafurnaceathightemperatures.

(cid:129)CrystalGrowth.High-puritySiCpowderisusedtogrowsingle-crystalingotsusing

methodslikePVT,liquidphasemethodorothersublimationtechniques.Theproces

ocursinagraphitecrucibleunderspecificthermalconditions,alowingSiCpowderto

sublimateandredepositonasedcrystal.

(cid:129)Orientationandslicing.OncetheSiCcrystalingotisgrown,itisorientedandsliced

intowafers.Thisinvolvesorientingthecrystaltoensureproperalignmentofthe

crystalineplanesandslicingitintothinwafersusingdiamond-coatedwiresawsor

laser.

(cid:129)SurfaceGrindingandPolishing.Theslicedwafersundergogrindingandpolishingto

achieveaflat,smoth,andefect-fresurfacesuitableforsubsequentelectronicdevice

fabrication.

(cid:129)FinalSubstrateCleaning.Thistepfurtherenhancesthewafer’surfacefinishby

removinganyremainingsurfaceparticles.

(cid:129)InspectionandQualityControl.ThefinishedSiCwafersaresubjectedtothorough

inspectionandqualitycontroltoensuretheymethespecificationsintermsofcrystal

quality,surfacedefects,andimensionaltolerances.

ProductionEquipmentandMachinery

Ouradvancedmanufacturingfacilitiesaresentialforenhancingproductqualityandcost

competitivenes.Mostofourmachinesandequipmentarehighlyautomated,whichalowsusto

enhancemanufacturingeficiencyandreducelaborcosts.Wedesign,customizeandintegratea

varietyofadvancedequipmentintourproductionproceses.Ourcriticalproductionequipment

primarilyincludescrystalgrowthfurnaces,powdersynthesisequipment,waferslicingequipment

andpolishingandcleaningequipment.Wehavestablishedcolaborativepartnershipswith

equipmentmanufacturers,whereweareresponsibleforthedesignofthecorecomponentsofour

criticalproductionequipment,suchasourcrystalgrowthfurnaces,whileourequipment

manufacturerpartnersfocusonthemanufacturingproceses.

BUSINES

---

ProductionExpansionPlan

WeplantocontinuetoexpandtheproductioncapacityofourSiCsubstrates.Wedevelop

productionexpansionplansprimarilybasedon(i)theanticipatedsuplyandemandforourSiC

substrates;(i)thecurentandanticipatedpricesofourSiCsubstrates;(i)theutilizationofthe

existingproductionfacilitiesandthefeasibilityoftheirexpansion;(iv)thestimatedcostof

development;and(v)ourcapitalresources.

AsSiCsubstratescontinuetopenetratexistingaplicationscenarios,suchaselectric

vehicles,AIdatacenters,photovoltaicsystems,powergrids,householdapliancesand

telecomunication,andsimultaneouslyexpandintoemergingfields,suchaslow-altitudeaviation,

wearestrategicalyplaningtoenhanceourproductioncapacityfor8-inchandlarger-diameter

SiCsubstrates.Thisexpansionwilbeachievedthroughthestablishmentofnewoverseas

productionfacilitiesandthexpansionofourexistingproductionplants,whichisexpectedto

significantlybostourdeliverycapabilitiesandeficiency.Se“FuturePlansandUseof

Proceds.”

Maintenance

Weconductcarefulandtimelymaintenanceofourproductionfacilitiesandequipment.Each

pieceofourmajorproductionequipmentorpowermachineryundergoesregularservicingand

maintenance,adheringtopredefinedschedules.Wehavestablishedandcontinualyupdate

internalprocedurestailoredtotheuniquecharacteristicsandrequirementsofeachpieceof

productionequipmentorpowermachinery.DuringtheTrackRecordPeriodanduptotheLatest

PracticableDate,wedidnotexperienceanymaterialorprolongedsuspensionsofoperationsdue

toequipment,machineryorothermechanicalfailures.

PROCUREMENTANDSUPLYCHAINMANAGEMENT

RawMaterialsandProcurement

TheproductionofSiCsubstratesreliesonhigh-qualityrawmaterials,theintrinsicqualityof

whichdirectlyafectstheficiency,reliability,andefectivenesoftheSiCsubstrates,making

themcriticalforproducingsemiconductordevices.Consequently,topsupliersofthese

high-qualitymaterialsoftenchosetopartnerwithleadingmarketplayers,suchasus,who

demonstrateacomitmentoexcelenceandinovation.Byestablishinglong-termcoperation

withthesetopsupliers,wensurestableacestoesentialresources,enablingustomaintain

consistentqualityandperformancestandardsinourSiCsubstrates,therebystrengtheningour

competitivepositioninthemarket.

BUSINES

---

WeprocureavarietyofmaterialsandequipmentnecesaryforthemanufacturingofourSiC

substrates,includingcarbonpowder,siliconpowder,graphitethermalinsulationmaterials,and

equipmentforcrystalgrowth,slicing,grindingandpolishing.Tomitigatepotentialimpactfrom

increasesinrawmaterialcosts,weprimarilyenteredintolong-termcoperationagrementswith

supliersofkeyproductionmaterials,suchasgraphitethermalinsulationmaterials,maintainclose

comunicationandimplementstrategicprocurement.Wehavealsoimplementedperiodicreviews

andinternalmechanismstomonitorourawmaterialcostsbytakingintoconsiderationour

inventorylevels,salesprospectsandmarketrends.

Wemaintainalistofqualifiedsuplierstofacilitateourselectionofthemostsuitableraw

materialsupliersfortheprojectsacordingtotheprocurementplans.Ourprocurementplansare

formulatedbasedonproductionschedules,inventorylevels,suplierleadtimeandproduct

lifetime.Aftertheprocurementplansareaproved,ourprocurementdepartmentwilconducta

priceinquiry,evaluatingpotentialsupliersontheirbasicinformationandcriteriaincludingprice,

quality,credentialsandeliverytimelines.Wetypicalynegotiatepriceswithoursupliersonan

anualbasis,andwesetouthetermsinframeworkagrements.Inresponsetothepotentialprice

increasesfromajorsupliers,weprimarilyconductsecondarysourcevaluationstomitigatethe

impactonourawmaterialcosts.

Supliers

DuringtheTrackRecordPeriod,weprimarilyengagedsupliersofrawmaterialsand

equipmentnecesaryforourpreparationandproductionofSiCsubstratesaswelasconstruction

andutilitieserviceproviders.

SuplierManagement

Wetypicalypartnerwithexperiencedandreputablesuplierstoguarantethequalityofour

products.Ourselectioncriteriafocusontechnologicalexpertise,infrastructureandequipment,

productquality,credentials,reputation,andpricing.

Wehavestablishedstrictsupliermanagementprocedures.Ourprocurementprocesbegins

bycalculatingtheamountorquantitiesofrawmaterialsnededbasedontheproductionschedule

andbilofmaterials,whichalowsustocreateacomprehensivematerialdemandlist.Wethen

analyzethetotalmaterialrequirements,deliverycycles,inventorylevels,andpendingorder

quantitiestodevelopaprocurementplan.Oncetheproductiondepartmentreviewsandaproves

theplan,itisforwardedtotheprocurementdepartmentforexecution.Forcriticalandscarce

materials,weimplementstrategicstockingtoensureavailability.Weutilizeacombinationof

BUSINES

---

anualandad-hocorders,alowingustoflexiblyalocateresourcestometproductioneds

efectively.Westablishformalpartnershipwithasuplieronlyaftertheirsampleproductsmet

ourigorousinspectioncriteriandpasourasesment.

Inaditiontoevaluatingnewsupliers,weperformanualreviewsofourexistingsupliers,

requiringthemtopromptlyadresanyisuesidentifieduringtheseasesments.Suplierswho

donotmetourstandardsmustimplementcorectiveactionsandadjustheirbusinestrategies.

Continuednon-compliancemayleadtotheterminationofourelationshipwiththesuplier.

Wensurethatouroperationsarenotreliantonasinglesuplier.Toensurestablesuplyof

rawmaterials,duringtheTrackRecordPeriod,wemaintainedmultiplesuplierstoprevent

overdependenceandbelievethatsuitablealternativesforoursuplierscanbereadilyfound.

Wetypicalyenterintoframeworksuplyagrementswithsupliers,thesalientermsof

whicharesetoutbelow:

(cid:129)Duration.Thedurationofoursuplyagrementsistypicalyoneyear.

(cid:129)Productspecifications.Wespecifytheproductname,specification,price,quantity,

deliverytimeandeliverylocationineachpurchaseorderwesendtoursupliers.

(cid:129)Paymentandelivery.Thesupliersaretypicalyresponsibleforthedeliveryof

productstourdesignatedlocationspecifiedineachpurchaseorder.Intermsof

payment,weitherprepayforourpurchaseorder,oraregeneralygrantedbyour

supliersacreditermof30daysto90daysfolowingourisuanceofaleterof

aceptance.

(cid:129)Transferofrisk.Therisktransferstousafterwecompleteinspectionandconfirm

receiptoftheproducts.

(cid:129)QualityGuarante.Unlesotherwisestipulatedinthepurchaseorder,typicalythe

supliers’standardqualitywarantyperiodlastsforthreyearsfolowingourisuance

ofaleterofaceptance.Duringthequalitywarantyperiod,thesupliersguarante

thatalproductsarefrefromdefectsindesign,materials,workmanshipandreliability,

andhavebenapropriatelypackaged.

(cid:129)Confidentiality.Thesupliershalnotdiscloseormakepublicthecontentsofthe

purchaseorderswithoutourpriorwritenconsent.

BUSINES

---

(cid:129)Productreturn.Wehavetherightoreject,replaceoreturnproductsforavarietyof

reasons,includingnon-conformitywithproductquality,productspecificationsor

quantitywiththeorderplaced.

(cid:129)Termination.Wearentitledtoterminatethepurchaseorderwhenthesuplierfailsto

performandoesnotmaketimelycorectionsaftereceiptofourwritenotice.

MajorSupliers

WeprimarilyprocureourawmaterialsandequipmentinChina.DuringtheTrackRecord

Period,ourmajorsupliersprimarilyincludedrawmaterialsandequipmentsupliers.Purchases

fromourlargestsuplierin2022,2023,2024andthethremonthsendedMarch31,2025,

amountedtoRMB203.9milion,RMB317.0milion,RMB346.4milionandRMB89.0milion,

respectively,acountingfor14.4%,10.5%,21.1%and23.9%ofourtotalpurchaseamount,

respectively,duringthesameperiods.Purchasesfromourfivelargestsupliers(excluding

constructionserviceproviders)duringeachyearin2022,2023,2024andthethremonthsended

March31,2025,amountedtoRMB553.0milion,RMB1,086.4milion,RMB750.2milionand

RMB186.0milion,respectively,acountingfor39.1%,35.9%,45.6%and49.9%ofourtotal

purchases,respectively,duringthesameperiods.DuringtheTrackRecordPeriod,wepaidour

supliersprimarilybybanktransferandbankaceptance.

ThefolowingtablesetforthdetailsofourtopfivesupliersduringtheTrackRecord

Period.

FortheyearendedDecember31,2022

No.SupliersBackground

Products/services

providedtous

Purchase

amount

%oftotal

purchase

amount

Yearof

comencement

ofbusines

relationship

(RMBin

thousands)

1Suplier1

.

ListedontheShenzhenStockExchange,Suplier1

wasfoundedin2001andregisteredinBeijing.It

primarilyengagesinsemiconductorequipment

manufacturing.

Equipment203,94114.4%2019

2Suplier2

.

Suplier2wasfoundedin2003andregisteredin

Shanghai.Itprimarilyengagesintheproduction

ofgraphitematerials.

Rawmaterials178,20612.6%2020

BUSINES

---

No.SupliersBackground

Products/services

providedtous

Purchase

amount

%oftotal

purchase

amount

Yearof

comencement

ofbusines

relationship

(RMBin

thousands)

3Suplier4

.

Itwasfoundedin1953andregisteredinBeijing.It

primarilyengagesinthesuplyofspecialized

equipmentaswelasengineringandconstruction

services.

Equipment62,0964.4%2021

4Suplier7

.

Itwasfoundedin2004andregisteredinJiangsu.It

primarilyengagesintheproductionofgraphite

materials.

Rawmaterials55,0063.9%2020

5Suplier10

.

Itwasfoundedin1991andregisteredinShandong.

Itprimarilyengagesinthedistributionandsuply

ofelectricity.

Utilities53,7133.8%2020

Total552,96239.1%

FortheyearendedDecember31,2023

No.SupliersBackground

Products/services

providedtous

Purchase

amount

%oftotal

purchase

amount

Yearof

comencement

ofbusines

relationship

(RMBin

thousands)

1Suplier1

.

ListedontheShenzhenStockExchange,Suplier1

wasfoundedin2001andregisteredinBeijing.It

primarilyengagesinsemiconductorequipment

manufacturing.

Equipment317,04710.5%2019

2Suplier2

.

Suplier2wasfoundedin2003andregisteredin

Shanghai.Itprimarilyengagesintheproduction

ofgraphitematerials.

Rawmaterials279,2169.2%2020

3Suplier4

.

Suplier4wasfoundedin1953andregisteredin

Beijing.Itprimarilyengagesinthesuplyof

specializedequipmentaswelasengineringand

constructionservices.

Equipment245,5298.1%2021

4Suplier6

.

Suplier6wasfoundedin2013andregisteredin

HongKong.Itprimarilyengagesin

semiconductorpackagingandmanufacturing.

Equipment131,0994.3%2022

BUSINES

---

No.SupliersBackground

Products/services

providedtous

Purchase

amount

%oftotal

purchase

amount

Yearof

comencement

ofbusines

relationship

(RMBin

thousands)

5Suplier7

.

Suplier7wasfoundedin2004andregisteredin

Jiangsu.Itprimarilyengagesintheproductionof

graphitematerials.

Rawmaterials113,4893.8%2020

Total1,086,38035.9%

FortheyearendedDecember31,2024

No.SupliersBackground

Products/services

providedtous

Purchase

amount

%oftotal

purchase

amount

Yearof

comencement

ofbusines

relationship

(RMBin

thousands)

1Suplier2

.

Suplier2wasfoundedin2003andregisteredin

Shanghai.Itprimarilyengagesintheproduction

ofgraphitematerials.

Rawmaterials346,39421.1%2020

2Suplier7

.

Suplier7wasfoundedin2004andregisteredin

Jiangsu.Itprimarilyengagesintheproductionof

graphitematerials.

Rawmaterials147,1088.9%2020

3Suplier8

.

Suplier8wasfoundedin2007andregisteredin

Zhejiang.Itprimarilyengagesintheproduction

ofgraphitematerials.

Rawmaterials108,4116.6%2022

4Suplier9

.

Suplier9wasfoundedin1989andregisteredin

Shanghai.Itprimarilyengagesinthedistribution

andsuplyofelectricity.

Utilities87,9095.3%2021

5Suplier10

.

Suplier10wasfoundedin1991andregisteredin

Shandong.Itprimarilyengagesinthedistribution

andsuplyofelectricity.

Utilities60,3713.7%2020

Total750,19245.6%

BUSINES

---

FortheperiodendedMarch31,2025

No.SupliersBackground

Products/services

providedtous

Purchase

amount

%oftotal

purchase

amount

Yearof

comencement

ofbusines

relationship

(RMBin

thousands)

1Suplier2

.

Suplier2wasfoundedin2003andregisteredin

Shanghai.Itprimarilyengagesintheproduction

ofgraphitematerials.

Rawmaterials89,00123.9%2020

2Suplier7

.

Suplier7wasfoundedin2004andregisteredin

Jiangsu.Itprimarilyengagesintheproductionof

graphitematerials.

Rawmaterials34,9139.4%2020

3Suplier8

.

Suplier8wasfoundedin2007andregisteredin

Zhejiang.Itprimarilyengagesintheproduction

ofgraphitematerials.

Rawmaterials25,2636.8%2022

4Suplier9

.

Suplier9wasfoundedin1989andregisteredin

Shanghai.Itprimarilyengagesinthedistribution

andsuplyofelectricity.

Utilities22,2515.9%2021

5Suplier10

.

Suplier10wasfoundedin1991andregisteredin

Shandong.Itprimarilyengagesinthedistribution

andsuplyofelectricity.

Utilities14,5343.9%2020

Total185,96249.9%

AsoftheLatestPracticableDate,noneofourDirectors,theirespectivecloseasociatesor

anyofourshareholders(whownedortotheknowledgeoftheDirectorshadownedmorethan

5%ofourisuedsharecapital)hadanyinterestinanyofourfivelargestsupliers(excluding

constructionserviceproviders).

QUALITYCONTROL

Westrivetodeliverproductstourcustomersthatarefreofanydefects.Tothatend,we

havedevelopedandimplementedaZero-DefectPlan,aimingfordefect-fredelivery.Wehavealso

establishedrobustpoliciesandetailedprocedurestoupholdproductquality,anchoredbya

comprehensivequalitymanagementsystemthatadherestoIATF16949standardsfor

automotive-gradequality.Tomaintainourcompetitivedgeinqualitymanagement,wesubjectour

practicestoregularinternalandexternalauditsandreviews.Theintegrityofourqualitycontrol

systemismeticulouslyasesedthroughanualinternalaudits.

BUSINES

---

Ourqualitycontrolmeasuresencompasawiderangeofactivities,coveringR&D

management,suplierqualitymanagement,productionproceses,outboundinspectionand

customerservices:

(cid:129)R&DManagement.WehavestablishedacomprehensiveR&Dmanagementproces

consistingofthoroughprojectracking,phasemanagementandrigorousqualitycontrol

measures.Ourefortsarefocusedonaligningprojectswithourstrategicobjectives

duringtheR&Dstagewhilensuringhigh-qualityfulfilmentofcustomerequirements.

(cid:129)RawMaterialSuplierQualityManagement.Wehaveimplementedarobustsuplier

onboardingmanagementsystem,clearlydefiningsuplierqualificationprinciples.We

havestablishedprecisematerialstandardsforalrawmaterialsusedandrigorously

enforceincomingmaterialinspectionandqualitycontrolprotocols.Inacordancewith

oursuplierevaluationmanagementmethodology,weconductregularperformance

asesmentsofsupliers,drivingcontinuousimprovementinoursuplychain.

(cid:129)ProductionProcesManagement.Wehavestablishedcomprehensivecontrolplansfor

eachstageofproductiontoensurethoroughmanufacturingandproductqualitycontrol.

Intheventofproductionorqualityanomalies,wewilinitiateourOutofControl

ActionPlan(OCAP)proces.Whenproductqualitynon-conformancesocur,wewil

activateournon-conformingproductcontrolprocedureconsistingofnon-conformance

review,rotcauseanalysisandtheimplementationofcorectiveandpreventive

measures.Ourproductionprocesmanagementmeasureshelpreventhereleaseof

non-conformingproductsandmitigaterecurenceofqualityisues.

(cid:129)ShipmentInspections.Beforedelivery,weconducthoroughinspectionsofproduct

apearancetoensurecompliancewithcustomerqualityexpectations.Insightsgained

fromtheseinspectionsinformongoingimprovementsinourproductionproceses.

(cid:129)CustomerServiceQualityManagement.Wehaveinstitutedastandardizedprocesfor

resolvingcustomercomplaintseficiently.Byemployingatieredaproachbasedonthe

severityofeachisue,wemaintainthehighstandardsofproductandservicequality

thatourcustomersrelyupon.

Throughtheseintegratedqualitymanagementstrategies,wearededicatedtoensuringthe

excelenceandreliabilityofourproducts.

BUSINES

---

After-SalesServices

Intheventhatourproductshaveanydefectorqualityisue,wewilprovidereplenishment

oreplacementwithinthespecifiedtimeframeuponreceivingnotificationfromourcustomers.We

believethatdeliveringexcelentafter-saleserviceiscrucialtoursuces,asitenhancesthe

productvaluechainandincreasesatisfactionamongcustomersandend-users.Toensurefective

comunicationwithourcustomers,weconductregularafter-salesatisfactionsurveys.

Customerfedbackiscolectedthroughtelephone,email,andourproductdepartmentand

marketingteam.Whenacomplaintarises,ourdedicatedteamwilproactivelyliaisewithour

customersbyphoneoremailtothoroughlyasesandanalyzethesituationandidentifythecause

oftheisue.Ifaqualityproblemislinkedtourproducts,weaimtopromptlyadresuch

problemacordingtourcustomer’srequirements,orprovidereplenishmentoreplacementwithin

thetimeperiodspecifiedbyourcustomers.

Whenacustomereportsaqualityisue,ourtechnicalteamwilquicklyconductquality

isueanalysis.Afteraninternalinvestigationconfirmsaproductdefect,ourqualitycontrol

departmentwilnotifyourproductdepartmentoinitiatethereplenishmentoreplacementproces.

WedidnotencounteranysignificantproductreplenishmentoreplacementduringtheTrack

RecordPeriod.

SALESANDMARKETING

DuringtheTrackRecordPeriod,ourproductsweresoldglobaly.In2022,2023and2024,

ourevenuefromsalesoutsideMainlandChinacontinuedtoincreaseandamountedtoRMB52.4

milion,RMB414.4milionandRMB845.5milion,respectively,acountingfor12.6%,33.1%and

47.8%ofourtotalrevenue,respectively,duringthesameyears.InthethremonthsendedMarch

31,2024and2025,ourevenuefromsalesoutsideMainlandChinaincreasedfromRMB144.0

miliontoRMB195.1milion,respectively,acountingfor33.8%and47.8%ofourtotalrevenue,

respectively,duringthesameperiods.

OurGlobalSalesNetwork

DuringtheTrackRecordPeriod,weadoptedadirectsalesmodelandhaveanexperienced

andhighlytrainedsalesandmarketingteam,consistingof38personelasofMarch31,2025,

whoproactivelyidentifymarketoportunitiesandesignsalestrategies.

Ourglobalizationstrategyprimarilyfocusesonbuildingstablebusinesrelationshipswith

internationaleadingpowersemiconductordevicecompanies,improvingoverseascustomerservice

throughouroverseasubsidiariesandexpandingourproductioncapacityinSoutheastAsiatomet

BUSINES

---

thegrowinginternationaldemandforourSiCsubstrates.AsofMarch31,2025,wehad

establishedastrategicglobalpresencewith(i)salesoperationinJapan;(i)asubsidiaryin

Germany(SICEuropeGmbH)asaservicecentertoprovidequalityservicesandcustomer

suportoEuropeancustomers;and(i)aninvestmenthubinSingapore(VisionaryHorizonPte.

Ltd)toinvestinupstreamsemiconductormaterialsandequipment,aswelasdownstreampower

devicemanufacturersandemergingaplicationsofSiC.Wearealsoplaningtofurtherextendour

globalfotprintbysetingupaditionalsalesandservicecentersaswelasproductionfacilitiesin

overseasmarkets.

Oursalesandmarketingteamisprimarilyresponsibleforconectingwithcustomersand

providingthemwithafter-saleservices.DuringtheTrackRecordPeriod,mostofourcustomers

werepowersemiconductorcompanies.Adoptingadirectsalesmodelenablesusto(i)receivefrom

customersimediateandunfilteredfedbackaboutourproducts;(i)preciselyunderstand

customerpreferencesandidentifyareasforimprovement;(i)respondtocustomerequirements,

alowingustofertailoredproductsthatmetourcustomers’specificneds;(iv)quicklyadapto

changingmarketdemandsorconsumerpreferenceswithfirsthandcustomerinsights,alowingfor

agilebusinestrategies;and(v)improvecustomerexperience,leadingtohighersatisfactionand

loyaltybyadresingcustomerconcernsdirectly.Wegaincustomersprimarilybycapitalizingon

therobustbrandreputationandsubstantialindustryinfluencestablishedthroughsustained,

comprehensiveandin-depthcolaborationwithtop-tiercompaniesacrosdiverseaplicationareas,

togetherwithothertargetedmarketingandpromotionalactivities.

ThesalientermsofourstandardirectsalesagrementsduringtheTrackRecordPeriodare

setoutbelow:

(cid:129)Duration.Thesalesagrementswithourcustomerstypicalydonothaveaspecified

duration.

(cid:129)Pricingpolicy.Weselourproductstourcustomersatprevailingmarketprice.

(cid:129)Payment.Oursalescustomersaretypicalyrequiredtoprepayapredetermined

percentageofeitherthetotalcontractvalueorthebatchinvoiceamountpriorto

shipment,andsetletheremainingbalancewithintheagred-upontimeframefolowing

receiptofourproducts.

(cid:129)Volumerebate.Weprovidevolumerebatestocustomerswhenthequantityofproducts

theypurchaseinagivenperiodexcedsthethresholdspecifiedinthesalesagrement,

which,acordingtoFrost&Sulivan,isacomonpracticeintheindustry.Volume

rebatesareofsetagainstamountspayablebyourcustomers.

BUSINES

---

(cid:129)Logistics.Weareresponsiblefordeliveringourproductstolocationsdesignatedbyour

customers.

(cid:129)Transferofrisks.Theriskstransfertourcustomersaftertheyconfirmreceiptofour

products.

(cid:129)Returnarangements.Wetypicalydonotaceptproductreturnunlesotherwise

agred.

(cid:129)Confidentiality.Bothourcustomersandwearecontractualyobligatedtomaintainstrict

confidentialityregardingproductinformation,pricingandrelatedmaterials.Neither

partyispermitedtodisclosesuchinformationtoathirdparty.

(cid:129)Termination.Oursalesagrementsmaybeterminateduponthemutualconsentbetwen

ourcustomersandus.

Marketing

ThroughourBrandTouch-PointsPlan,weaimtoensurethatourcustomersformlasting

memoriesandimpresionsofourbrandwitheveryinteractiontheyhavewithus.Weaimtocreate

aunifiedandpositivebrandperceptionthroughourproductmanuals,businescardsandour

standardizedemployeuniforms.Thisconsistentengagementisdesignedtogradualybuilda

comprehensiveandfavorablebrandrecognition,ultimatelyinfluencingourcustomers’

decision-makingproceses.

Aditionaly,weimplementacomprehensivecustomerstrategythatcoversthentire

lifecycleofsalesandmarketing,fromcustomeracquisitiontoproductdelivery,furtherbolstering

ourindustryreputationandinfluence.Wemaintainclosecomunicationwithourcustomersto

gainadepunderstandingoftheirneds.Byutilizingourunderstandingofmarketdynamicsand

customerneds,wecanstrategicalypositionourproducts,colaborateondevelopingnew

solutions,quicklyadrestechnicalchalengesinproduction,implementforward-thinking

technologyframeworksandeliveroutstandingafter-salesuport.

Ourcustomer-centricmarketingaproachelpsuscultivateandexpandbusines

relationships.Weactivelygatherfedbackfromcustomersandbusinespartnerstogainvaluable

insightsthatpropelourbusinesandoperationsforward.Weformulateandcaryoutargeted

marketingstrategies,suchasexhibitions,forumsandtechnicalseminars.Aswexpandboth

domesticalyandinternationaly,wewilenhanceoursalesandmarketingnetworktoensurestrong

geographicoverageinbothexistingandnewmarkets.

BUSINES

---

Customers

DuringtheTrackRecordPeriod,ourSiCsubstrateswereprimarilysoldtodomesticand

internationalpowersemiconductormanufacturers.Weintendtofurtherstrengthenexisting

customerelationshipsandpursuenewrelationshipstoexpandourcustomerbase.

Revenuegeneratedfromourlargestcustomerin2022,2023,2024andthethremonths

endedMarch31,2025,amountedtoRMB108.3milion,RMB213.4milion,RMB336.1milion

andRMB62.5milion,respectively,acountingfor26.0%,17.1%,19.0%and15.3%ofourtotal

revenue,respectively,inthesameperiods.Revenuegeneratedfromourfivelargestcustomersin

2022,2023,2024andthethremonthsendedMarch312025,amountedtoRMB270.8milion,

RMB639.9milion,RMB1,011.8milionandRMB215.6milion,respectively,acountingfor

65.0%,51.3%,57.2%and52.9%ofourtotalrevenue,respectively.Ourfivelargestcustomersin

eachyearandperioduringtheTrackRecordPeriodcontributedtoverhalfofourevenue,

primarilybecausetheSiCpowersemiconductordevicemarketisrelativelyconcentratedwithfew

prominentmarketplayersholdingacombinedmarketshareofover95%,acordingtoFrost&

Sulivan.Se“RiskFactors—RisksRelatingtoOurIndustryandBusines—Wearexposedto

concentrationriskofrelianceonourmajorcustomersandsupliers.”Nonetheles,ourDirectors

areoftheviewthatwedonothaveamaterialrelianceonourmajorcustomers,consideringthat

(i)ourbusinesrelationshipswithourmajorcustomersaremutualybeneficialand

complementary,giventhatourlong-termcoperationwithourmajorcustomershaveledtour

familiaritywiththeirstandardsandrequirements,whichenableustoreducecomunicationcosts

andbuildmutualtrust;(i)amajorityofourmajorcustomersareglobalyleadingpower

semiconductormanufacturersthatimposextremelystringentqualificationrequirementsontheir

supliers,andaretypicalyreluctantochangetheirqualifiedSiCsubstratesupliersthatpas

complexvalidationproceses;and(i)wehadenteredintolong-termstrategicagrementswith

renownedcustomersandsupliers.DuringtheTrackRecordPeriod,weaceptpaymentfromour

customersprimarilythroughbanktransfer.

BUSINES

---

ThefolowingtablesetforthdetailsofourfivelargestcustomersduringtheTrackRecord

Period.

FortheyearendedDecember31,2022

No.CustomerBackgroundProductsoldRevenue

%oftotal

revenue

Yearof

comencement

ofbusines

relationship

(RMBin

thousands)

1Customer1

.

Customer1wasfoundedin1988andregisteredin

Guangdong.Itisaleadinglobalcompanyinthe

technologyindustry,specializingininovative

infrastructureandinteligentdevices.

SiCmaterials108,34426.0%2019

2Customer2

(1)

.

Customer2wasfoundedin2011andregisteredin

Fujian.Itprimarilyengagesintheresearch,

development,productionandsalesofSiC

epitaxialwafers.

SiCmaterials58,34914.0%2021

3Customer3

.

Customer3wasfoundedin2002andregisteredin

Beijing.Itprimarilyengagesinthedesignand

manufacturingofpowersemiconductorsandradio

frequencysemiconductors.

SiCmaterials50,75312.2%2020

4Customer4

.

Customer4wasfoundedin2017andregisteredin

Guangdong.Itprimarilyengagesingemstone

(includingsyntheticgemstone)manufacturing.

OtherSiC

products

(2)

35,7048.6%2020

5Customer5

.

Customer5wasfoundedin2007andregisteredin

Guangdong.Itprimarilyengagesinthedesign

andmanufacturingofpowersemiconductors,

IGBTmodulesandelectricvehiclelectronics.

SiCmaterials17,6284.2%2020

Total270,77865.0%

BUSINES

---

FortheyearendedDecember31,2023

No.CustomerBackgroundProductsoldRevenue

%oftotal

revenue

Yearof

comencement

ofbusines

relationship

(RMBin

thousands)

1Customer2

(1)

.

Customer2wasfoundedin2011andregisteredin

Fujian.Itprimarilyengagesintheresearch,

development,productionandsalesofSiC

epitaxialwafers.

SiCmaterials213,43717.1%2021

2Customer6

.

ListedontheFrankfurtStockExchange,Customer6

wasfoundedin1999andregisteredinGermany.

Itprimarilyengagesinthedesignand

manufacturingofpowersemiconductors,

automotivelectronicsandsensors.

SiCmaterials

andother

SiC

products

(2)

182,53014.6%2022

3Customer3

.

Customer3wasfoundedin2002andregisteredin

Beijing.Itprimarilyengagesinthedesignand

manufacturingofpowersemiconductorsandradio

frequencysemiconductors.

SiCmaterials102,1158.2%2020

4Customer7

.

Customer7wasfoundedin1886andregisteredin

Germany.Itprimarilyengagesinthedesignand

manufacturingofautomotivesemiconductorsand

powersemiconductors.

SiCmaterials

andother

SiC

products

(2)

77,1186.2%2021

5Customer8

.

ListedontheNASDAQStockExchange,Customer

8wasfoundedin1999andregisteredinthe

UnitedStates.Itprimarilyengagesinthedesign

andmanufacturingofautomativesemiconductors,

powersemiconductorsandintegratedcircuits.

SiCmaterials64,6585.2%2023

Total639,85851.3%

BUSINES

---

FortheyearendedDecember31,2024

No.CustomerBackgroundProductsoldRevenue

%oftotal

revenue

Yearof

comencement

ofbusines

relationship

(RMBin

thousands)

1Customer7

.

Customer7wasfoundedin1886andregisteredin

Germany.Itprimarilyengagesinthedesignand

manufacturingofautomotivesemiconductorsand

powersemiconductors.

SiCmaterials

andother

SiC

products

(2)

336,05119.0%2021

2Customer6

.

ListedontheFrankfurtStockExchange,Customer6

wasfoundedin1999andregisteredinGermany.

Itengagesinthedesignandmanufacturingof

powersemiconductors,automotivelectronicsand

sensors.

SiCmaterials

andother

SiC

products

(2)

308,90617.4%2022

3Customer10

.

Customer10wasfoundedin2022andregisteredin

Guangxi.Itprimarilyengagesingemstone

(includingsyntheticgemstone)manufacturing.

OtherSiC

products

(2)

139,7437.9%2023

4Customer2

(1)

.

Customer2wasfoundedin2011andregisteredin

Fujian.Itprimarilyengagesintheresearch,

development,productionandsalesofSiC

epitaxialwafers.

SiCmaterials125,1387.1%2021

5Customer9

(1)

.

Customer9wasfoundedin2009andregisteredin

Guangdong.Itprimarilyengagesinthe

manufacturingofSiCepitaxialwafers.

SiCmaterials101,9955.8%2021

Total1,011,83357.2%

BUSINES

---

FortheperiodendedMarch31,2025

No.CustomerBackgroundProductsoldRevenue

%oftotal

revenue

Yearof

comencement

ofbusines

relationship

(RMBin

thousands)

1Customer7

.

Customer7wasfoundedin1886andregisteredin

Germany.Itprimarilyengagesinthedesignand

manufacturingofautomotivesemiconductorsand

powersemiconductors.

SiCmaterials

andother

SiC

products

(2)

62,49015.3%2021

2Customer10

.

Customer10wasfoundedin2022andregisteredin

Guangxi.Itprimarilyengagesingemstone

(includingsyntheticgemstone)manufacturing.

OtherSiC

products

(2)

56,95414.0%2023

3Customer6

.

ListedontheFrankfurtStockExchange,Customer6

wasfoundedin1999andregisteredinGermany.

Itengagesinthedesignandmanufacturingof

powersemiconductors,automotivelectronicsand

sensors.

SiCmaterials

andother

SiC

products

(2)

51,00912.5%2022

4Customer11

.

Customer11wasfoundedin1978andregisteredin

HongKong.Itprimarilyengagesinthesaleof

electronicwires,electricwires,andinformation

comunicationsequipment.

SiCmaterials26,4846.5%2021

5Customer3

.

Customer3wasfoundedin2002andregisteredin

Beijing.Itprimarilyengagesinthedesignand

manufacturingofpowersemiconductorsandradio

frequencysemiconductors.

SiCmaterials18,6594.6%2020

Total215,59652.9%

Notes:

(1)Tothebestofourknowledge,oneofourshareholderswhownedmorethan5%ofourisuedsharecapitalhad

lesthan10%equityinterestsineachofCustomers2and9.

(2)Includeproductsthatdonotmetsemiconductor-gradespecificationsacordingtourinternalclasification

standards,suchasmoisanitegemstones,whichareprimarilyusedinresearchandconsumergodsaplications.

BUSINES

---

Tothebestofourknowledge,asoftheLatestPracticableDate,exceptasdisclosedabove,

noneofourDirectors,theirespectivecloseasociatesoranyofourshareholders(whownedor

totheknowledgeofDirectorshadownedmorethan5%ofourisuedsharecapital)hadany

interestinanyofourfivelargestcustomers.

Pricing

Wepriceourproductsbyconsideringavarietyofactors,including(i)marketsuplyand

demand,(i)ourcostsofproduction,(i)productspecificationsandiameters,(iv)the

technologicalsophisticationofourproducts,(v)thetargetcustomersegmentswithinourproduct

markets,and(vi)prevailingmarketprice.Wemaintainapricingaproachthatalignscloselywith

ourcompetitorsintheindustry,andtherearenosignificantdiscrepanciesinpricingstrategiesor

pricelevels.Byconsideringthesefactors,westrivetofercompetitivepricingwhilensuringthe

sustainabilityandprofitabilityofouroperations.

LOGISTICSANDINVENTORYMANAGEMENT

Logistics

Wearededicatedtodevelopinganeficientlogisticsuplychaintoensurecustomer

satisfactionandenhanceourinventoryeficiency.Weareconsistentlyrefiningandstandardizing

ourlogisticsystemstoefectivelymanaginglogisticsproviders.DuringtheTrackRecordPeriod,

weutilizedqualifiedthird-partylogisticsproviderstohandlethetransportationofourfinished

godsfromourproductionplantstolocationsdesignatedbycustomers.Westablishstringent

transportationstandardsthatheselogisticsprovidersmustadhereto,andweregularlyasestheir

complianceandperformancetoensureficientandreliabledeliveryofourproducts.

InventoryManagement

Weplacesignificantemphasisoninventorymanagement,designatingspecializedpersonelto

deliveregulareportsoninventorystatustothemanagementeam.Ourinventorymanagementis

designedtocreatesynergyandoptimalresourcealocationamongorderplacement,procurement,

productmanufacturing,shiping,andotherproceses.Inventorylevelsareakeyfactorinour

procurementplaningproces,andwensurethatwemaintainsuficientinventorylevelsto

suportourproduction.

Ourinventoriesmainlyincluderawmaterials,work-in-progresandfinishedgods.Wehave

variouspoliciesinplacetoensurefectiveinventorymanagement,suchasourWarehouse

InventoryManagementPolicyandTangibleAsetInventoryManagementProcedures.

BUSINES

---

DATASECURITYANDPRIVACY

Inthecourseofourbusinesoperations,wemainlycolect,storeandprocesdatarelatingto

transactionswithcorporatecustomers,suchastheirnames,adreses,contactinformationand

orderdetails.Asourtransactionsarexclusivelywithenterprises,ouractivitiesgeneralydonot

involvethecolectionorprocesingofpersonalinformationfromcustomersoranyimportantdata

identifiedbythecompetentgovernmentauthorities.Inadition,wedidnothaveanycros-border

datatransactionsduringtheTrackRecordPeriod,andwearenotanoperatorofanetwork

platformoranoperatorofacriticalinformationinfrastructureundertheCybersecurityReview

Measures.AsadvisedbyourPRCLegalAdvisor,duringtheTrackRecordPeriodanduptothe

LatestPracticableDate,wehadcompliedwiththelawsandregulationsrelatedtodatasecurityin

almaterialaspects.

However,inrecentyears,dataprivacyandcybersecurityhavebecomecriticalgovernance

prioritiesforcompaniesglobaly.ThisisrelevantasthePRClegislatureandgovernment

authoritiesmayintroducenewcybersecurity,datasecurityandprivacylawsandregulations.

Consequently,ourpracticesregardingthecolection,use,storage,disclosureandtransferof

varioustypesofdatamaybesubjectoincreasedadministrativescrutiny.Se“RiskFactors—

RisksRelatingtoOurIndustryandBusines—Securitybreachesandotherdisruptionscould

compromiseourconfidentialandproprietaryinformation,whichcouldcauseourbusinesand

reputationtosufer.”

INFORMATIONTECHNOLOGYSYSTEMS

Informationtechnology(IT)isacriticalcomponentofourcompetitiveadvantageand

operationaleficiency.WecontinuouslyadaptandenhanceourITsystemstoalignwithour

businesgrowthandiverseoperationalrequirements.Thesesystemsuportesentialfunctions

includingsales,R&D,suplychainmanagement,production,andafter-saleservices.OurkeyIT

systemsinclude:

(cid:129)SAPsystem.Oursystem,aplicationsandproducts(SAP)systemintegratesalaspects

ofourbusines,includingfinance,procurement,production,logistics,sales,andquality

control.Thisintegrationfostersefectivecomunicationandcolaborationbetwen

departments,leadingtoincreasedeficiencyandproductivity.

(cid:129)SCMsystem.Weutilizethesuplychainmanagement(SCM)systemtohandledemand

forecasting,procurement,sales,inventory,logistics,suplierandcustomerelationsand

datanalysis.Thisoptimizesoursuplychainprocesesandenhanceseficiency.

BUSINES

---

(cid:129)SRMsystem.Wemanageoursuplierinformationthroughoursuplierelationship

management(SRM)system.OurSRMsystemhelpsusreinforcesuplierelationships,

improveprocurementeficiency,reduceoperationalcostsandenhancethetransparency

andstabilityofoursuplychain.

(cid:129)MESsystem.Themanufacturingexecutionsystem(MES)isdesignedtomanage

productionproceses,personel,equipment,materials,qualityandtechnology.OurMES

systemensureseficientexecutionofproductionplansthroughreal-timemonitoringof

productionprogresandoptimizesproductionproceseswithreal-timedatacolection

andanalysis,ensuringcontinuityandstabilityinourproduction.

(cid:129)EAPsystem.Weusethequipmentautomationplatform(EAP)systemtomanagethe

automationcontrolandatacolectionofourproductionequipment.Itprovides

real-timemonitoringofequipmentstatus,colectsproductiondata,automatesequipment

operationandofersfaultwarningandiagnostics,reducinghumanerorandimproving

productioneficiency.

(cid:129)OAsystem.Weusetheoficeautomation(OA)systemtomanageourdailyofice

operations,includingaprovalproceses,taskasignments,metingschedulingand

comunicationcolaboration.OurOAsystemsuportsourdigitalizedoperationand

enhancesouroficeficiencyandcolaborationcapabilities.

(cid:129)HRsystem.Weusethehumanresources(HR)systemtomanageourhumanresources,

coveringemployeinformation,recruitment,atendance,compensation,organizational

structureandreportanalysis.Thisaidsineficientlymanagingouremployesand

improvingthefectivenesandscientificmanagementofhumanresource.

ThroughoutheTrackRecordPeriodanduptotheLatestPracticableDate,wehadnot

encounteredanysignificantITsystemfailuresordowntimethatadverselyimpactedourbusines

operations.

COMPETITION

DuringtheTrackRecordPeriod,weprimarilyoferedSiCsubstrateswithdiferentypesand

diameters.TheglobalSiCsubstratemarketinwhichweoperateishighlycompetitiveand

characterizedbyrapidtechnologicalevolvement,fastchangesincustomerdemandsand

preferences,frequentintroductionofnewproductsandconstantemergenceofnewindustry

standardsandpractices.Inadition,itishighlyconcentrated,withthetopfivemarketparticipants

intermsofrevenuefromSiCsubstratesalesin2024holdingacombinedmarketshareof68.0%,

acordingtoFrost&Sulivan.SiCmaterials,withtheirsuperiorpropertiesandperformanceas

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comparedtotraditionalsiliconmaterials,haveundergonearapidevelopmentinrecentyearsand

significantlyexpandedtheiraplicationscenarios,particularlyinpowersemiconductordevices.

AcordingtoFrost&Sulivan,theglobalmarketsizeofSiCsubstratesintermsofrevenueis

expectedtoreachRMB58.5bilionin2030,representingaCAGRof37.1%betwen2024and

2030.

WecompetewithotherSiCsubstratecompaniesaroundtheworld.AcordingtoFrost&

Sulivan,werankedamongthetopthreglobalSiCsubstratemanufacturersintermsofrevenue

fromSiCsubstratesalesin2024withamarketshareof16.7%.Se“IndustryOverview.”We

believewearewelpreparedtoexcelinindustrycompetition.However,weoperateinahighly

competitiveindustry.Failuretocompetefectivelycouldadverselyafectourmarketshare,

growthandprofitability.Se“RiskFactors—RisksRelatingtoOurIndustryandBusines—The

semiconductormaterialindustryishighlycompetitive.Ifwearenotabletocompetesucesfuly,

ourbusines,resultsofoperationsandfutureprospectswilbeharmed.”

EMPLOYE

AsofMarch31,2025,wehadatotalof1,313andthemajorityofouremployeswerebased

inmainlandChina.Thefolowingtablesetsforththenumberofourful-timemployesby

functionasofMarch31,2025:

AsofMarch31,2025,

EmployeFunction

Numberof

employes

Percentageof

totalemployes

(%)

Production

.

92770.6

Management

.

15411.7

R&D

.

19414.8

Sales

.

382.9

Total

.

1,313100.0

Tostreamlinehumanresourcemanagement,westablishedacomprehensivesetofinternal

managementmeasures,outliningtheproceduresandcriteriaforecruitment,training,internal

referals,amongothers.

Weusevariousrecruitmentmethods,includingcampusrecruitment,onlinerecruitment,other

externalrecruitmentchanelsaswelasinternalreferalsandtransfers.Inaditiontosalariesand

benefits,wegeneralyprovideperformance-basedbonusesforourful-timemployes.Wehave

establishedacomprehensivesystemforemployetrainingandevelopment,includingeneral

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trainingcoveringcorporateculture,employerightsandresponsibilities,workplacesafety,data

security,andotherlogisticsaspects,aswelaspecifictrainingthatimprovemployeknowledge

andexpertiseincertainimportantareasrelatedtourbusines.Wearecomitedtomaking

continualefortstoprovideanengagingworkingenvironmentouremployes.

Wenterintostandardlaborcontractsandconfidentialityagrementswithourful-time

employes.Andwenterintonon-competitionagrementswithourkeymanagementand

profesionals.

Wehavestablishedalaboruniontofacilitatecomunicationsamongemployesandto

protectheirights.Webelievewemaintainagodworkingrelationshipwithouremployesand

wehavenotexperiencedanymaterialabordisputeoranydificultyinrecruitingstaforour

operationsduringtheTrackRecordPeriodanduptotheLatestPracticableDate.

INSURANCE

DuringtheTrackRecordPeriod,weprovidedmandatorysocialinsuranceforouremployes

asrequiredbyPRCsocialinsuranceregulations,suchaspensioninsurance,unemployment

insurance,workinjuryinsuranceandmedicalinsurance.

Wehavealsopurchasedcomercialinsurance.AsoftheLatestPracticableDate,webelieve

thatourinsurancecoverageisinlinewiththeindustrypracticeandadequatetocoverourkey

asets,facilitiesandliabilities.OurDirectorsconsiderourinsurancepolicyasawholeisinline

withthegeneralmarketpracticeandcomplieswiththerelevantrulesandregulationinthe

jurisdictionswhereweoperate.Se“RiskFactors—RisksRelatingtoOurIndustryandBusines

—Wemaynothavesuficientinsurancecoveragetocoverourpotentialiabilityorlosesand,as

aresult,ourbusines,financialcondition,resultsofoperationsandprospectsmaybematerialy

andadverselyafectedshouldanysuchliabilityorlosesarise.”

ENVIRONMENTAL,SOCIALANDGOVERNANCE

Weplacesignificantemphasisonenvironmental,socialandgovernance(ESG).Wehave

adoptedESGpolicies,analyzedandisclosedimportantESGisuesinacordancewiththe

provisionscontainedintheListingRules.WearecomitedtointegratingESGprinciplesinto

developmentstrategies,majordecisions,andproductionandoperation.

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ESGovernance

Weacknowledgetheimportanceofenvironmentalprotectionandsocialresponsibility.Our

Boardisprimarilyresponsiblefor:(1)formulatingESGvision,objectives,strategiesand

managementguidelines;(2)guidingtheimprovementofESGgovernancestructure;and(3)

reviewingandmonitoringESGgovernancestructure,policiesaswelasoperationand

management.Ourseniormanagementismainlyresponsiblefor:(1)dailymanagementofESG

work;(2)arangingrelevantdepartmentstocolectandreportESGinformation,andimplement

ESGwork;(3)regularlyreviewingkeyESGdata;and(4)leadingtheanualcompilationofESG

informationandreport.

ESGRiskManagement

WebelievethatheidentificationandmanagementofESG-relatedrisksarecrucialforour

sustainabledevelopment.

Toensuretheachievementofstrategicobjectivesandsustainablegrowthofcorporatevalues,

wearecomitedtoptimizingtheriskmanagementframeworkandintegratingriskmanagement

withbusinesdevelopment.Weactivelyexplorethecordinatedoperationofinternalcontrol,

compliance,andriskpreventionandcontrolincompliancewithlawsandregulationstoenhance

managementeficiency.Wehavegradualyestablishedacomprehensiveriskmanagement

mechanismthatencompasesriskidentification,asesment,response,supervisionandinspection,

therebystrengtheningouriskmanagementcapabilitiesandourabilitytorespondtorisks

efectively.Weconductedanasesmentoftheactualandpotentialenvironmental,climate-related

andsocialimpactsonourbusinesandidentifiedthefolowingrisksandoportunities:

(cid:129)Physicalrisks.Extremeweathereventsuchastyphons,heavyrains,andflodscaused

byglobalclimatechangemayleadtothedamageofourfixedasets,losoflabor,or

interuptioninproduction.Aditionaly,sealevelrising,climatewarming,andother

grenhousefectsmayincreaseourenergyconsumption,potentialydestabilizingour

facilities.

(cid:129)Transitionrisks.Thetransitionriskswefacearisefromtheincreasingemphasisonour

ESGperformancebyregulators,investorsandcustomers.Withthecontinuous

introductionofESG-relatedregulations,governmentsareimposingstrictercontrolson

carbonemisions,increasingourcompliancepresures.Furthermore,ascustomers’

environmentalawarenesgrows,companiesthatfailtotakefectiveclimate-related

actionsmaysuferdamagetotheirbrandimageandreputation.

(cid:129)Potentialoportunities.Asawidebandgapsemiconductormaterial,SiCsubstrateshave

significantadvantagesinimprovingenergyconversioneficiencyandreducingpower

los,makingthembecomeoneofthekeyfactorsinachievingrenenergyobjectives.

Againsthebackdropofpromotingthedigitaleconomyandthegoalsofcarbonpeak

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andcarboneutrality,therehasbenasurgeindemandforelectronicdeviceswithigh

eficiencyandlowenergyconsumption,therebydrivingthegrowthindemandforSiC

substrates.

DuringtheTrackRecordPeriodanduptotheLatestPracticableDate,wehavenotincured

anyfinesorotherpenaltiesforviolationsofESGregulations.

Environment

Asaleaderintheproductionofwidebandgapsemiconductormaterials,wearecomitedto

environmentalmanagementandsustainabledevelopment.Weactivelyimproveourenergy

optimizationandmanagementplans,andhavesucesfulyobtainedcertificationsforenergyand

environmentalmanagementsystems.Further,weconductgrenandinteligentransformationand

buildsmartfactoriestofurthereducemisions,increaseficiencyandpromotegrenand

low-carbondevelopment.InSeptember2024,wejoinedtheScienceBasedTargetsinitiative

(SBTi),whichisacorporateclimateactionorganizationthatenablescompaniesandfinancial

institutionsworldwidetoplaytheirpartincombatingtheclimatecrisis,demonstratingour

comitmentoachievingsustainabledevelopment.

WestrictlyadheretotheEnvironmentalProtectionLawofthePRC,theLawofthePRCon

thePreventionandControlofAirPolution,theLawofthePRConthePreventionandControlof

WaterPolution,theLawofthePRConthePreventionandControlofEnvironmentalPolutionby

SolidWaste,andtheLawofthePRConPromotingCleanProduction,andotherlawsand

regulations.WehaveformulatedtheinternalpoliciesuchastheSolidWasteManagementSystem,

theHouseholdWasteManagementSystem,theHazardousWasteManagementSystem,the

EnvironmentalGovernanceManagementSystem,theEnvironmentalProtectionMonitoring

ManagementSystem,theEnvironmentalProtectionAsesmentSystem,andtheEnvironmental

ProtectionManagementSystem.Meanwhile,wecontinuouslyinvestinenergyconservation,

environmentalprotection,andsafety,enhancingourcapabilitiesinthetreatmentofwastegas,

wastewaterandsolidwaste,energyrecoveryandutilization,andrenewablenergyaplications.

Weadheretonationalenvironmentalprotectionlawsandregulations.DuringtheTrack

RecordPeriod,therewerenoviolationsofenvironmentalprotectionlawsoregulations,andwe

havenotreceivedanypenaltiesrelatedtoenvironmentalprotection.Wecontinuouslyoptimize

environmentalmanagementspecificationsandimprovenergymanagementlevels,andhave

establishedacomprehensivenvironmentalandenergymanagementsystemcoveringthedesign,

development,productionandsales.AsoftheLatestPracticableDate,wehavesucesively

obtainedISO14001:2015EnvironmentalManagementSystemcertificationandISO50001:2018

EnergyManagementSystemcertification.

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EmisionsandWastes

Westrictlycomplywithenvironmentalprotectionlawsandregulationsaswelasrelevant

ecologicalguidelines.Weimplementhepolutantdischargepermitsystemandstrictlymonitor

emisionsthroughthepurchaseorconstructionofenvironmentalprotectionfacilities,

strengtheningenergyconsumptionmanagement,andoptimizingproductionproceses,among

others,toensurethetreatmentsandemisionsofpolutantscompliancewithrelevantstandardsin

theproductionproces.Asaleaderintheproductionofwidebandgapsemiconductormaterials,

wealwaysadheretotheconceptofcirculareconomy.Byoptimizingproductionproceses,

adjustingrawmaterialformulas,andclasifyingandrecyclingwastematerials,wensurethat

solidwastedisposalfulycomplieswithlegalrequirements.Furthermore,weactivelyexplore

optimizationsinproductionprocesesandrawmaterials.Throughtechnologicalupgrades,wehave

sucesfulyreducedthegenerationofhazardouswaste.

Themeasureswehavetakeninclude:

(cid:129)OnthebasisoftheStandardizedManagementRequirementsforWasteGasTreatment

Facilities,weformulatethemonitoringplansinacordancewiththeregulationsfor

polutantdischargeregistration.Wecolaboratewiththird-partyinstitutionstoregularly

conductmonitoringofwastegases,toensurethemisionsmetherequiredstandards,

andisuemonitoringreports;

(cid:129)WehaveformulatedtheWastewaterOperationManagementSystem,setingupstandard

operatingprocedures(SOPs)andtheWastewaterEquipmentManagementRegulations

forwastewatermonitoring,colection,treatmentandischarge,toensurethenormal

operationofwastewatertreatmentfacilities;

(cid:129)Wehavestablishedawastewateroperationteam,ledbytheheadoftheplantafairs

department,withenginersandoperatorsasmembers,responsibleforcordinating

wastewatertreatmentandreutilization,andmanagingwastewaterandwater

conservation;

(cid:129)WehaveformulatedtheHazardousWasteManagementSystemandtheSolidWaste

ManagementSystemCompilation,resolutelyimplementingthetreatmentprinciplesof

“reduction,harmlesnesandresourceutilization”forsolidwaste;

(cid:129)Forgeneralindustrialsolidwaste,householdwasteandhazardouswaste,wehave

clarifiedthemanagementsystemrequirementsfordiferentcategoriesofsolidwaste

duringeneration,discharge,recycling,disposalandutilization,ensuringlegal,

compliantandeficientdisposalandutilizationofsolidwaste;and

(cid:129)Weorganizeandencouragemployestoparticipateintrainingcourses,coveringtopics

suchasidentification,clasification,transfer,storage,andrelevantlawsandregulations.

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Thewastegeneratedinourdailyoperationsincludeswaste,wastewater,andexhaustgas.We

apointqualifiedspecializedinstitutionstorecycleandtreatgeneralsolidwasteandhazardous

waste,withthentireprocesbeingtraceable.TheShanghaiproductionbasecomenced

operationsinMay2023,andourproductioncapacityfurtherexpandedin2024,resultinginthe

increasesinthegenerationofhazardouswaste,non-hazardouswaste,wastewaterdischargeand

exhaustgasemisionsin2023and2024.Thefolowingtablesetsforththebreakdownofour

wastegenerateduringtheTrackRecordPeriod:

YearendedDecember31,

Thremonths

endedMarch31,

MetricUnit2022202320242025

Totalhazardouswaste

generated

.

tones(t)97.6198.8585.8128.3

Hazardouswastedensity

.

tones(t)/revenuein

milions(RMB)

0.230.160.330.31

Totalnon-hazardouswaste

generated

.

tones(t)0.0

(1)

342.5643.9232.2

Non-hazardouswaste

intensity

.

tones(t)/revenuein

milions(RMB)

0.0

(1)

0.270.360.57

Wastewaterdischarge

.

’000tones(t)307.0759.91,096.3281.0

Wastewaterdischarge

intensity

.

’000tones

(t)/revenuein

milions(RMB)

0.740.610.620.69

Exhaustgasemisions

.

tones(t)0.13.95.71.4

Exhaustgasemision

density

(2)

.

tones(t)/revenuein

milions(RMB)

0.000.000.000.00

Notes:

(1)Thegenerationofnon-hazardouswasteisexclusivelyasociatedwithShanghaiproductionbase.AsShanghai

productionbasewasnotinoperationin2022,thegenerationofnon-hazardouswastein2022amountedtonul,

whichalsoresultsinthenon-hazardouswasteintensityofnul.

(2)DuetotheminimalvolumeofexhaustgasemisionsduringtheTrackRecordPeriod,thecalculationresultsof

exhaustgasemisiondensitycouldnotbedisplayedtotwodecimalplaces.

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EnergyandResourceManagement

InacordancewiththestandardsofISO50001EnergyManagementSystem,wehave

establishedanenergypolicycenteredonthe“GrenInteligentManufacturing,Energy

ConservationandEficiencyImprovement,andFulParticipation”,andestablisheda

comprehensivenergymanagementframeworkwithclearenergyobjectivesandindicators.Indaily

operations,westrictlyimplementheresponsibilitysystemforenergyobjectivesandindicators,

andconductdetailedstatisticsandanalysisontheachievementofvariousenergyindicators.By

combiningenergyconservationmethodsthroughmanagementandtechnologicaltransformation,we

havesignificantlyimprovedenergyutilizationeficiencyandreducedenergycosts.

Ourenergymanagementaproachesprimarilyencompasroutinenergyconservation

management,technologicaltransformation,andenergyaudits.Routinenergyconservation

managementadherestoscientificusageofelectricityandwater,ensuringthateveryoperation

folowstheprinciplesofenergyconservationandemisionreduction.Energy-saving

transformationfurtherenhancesenergyutilizationeficiency,includingtherecoveryandreuseof

condensatewatertoreducewaterwaste,andthefulutilizationofwasteheatresourcestolower

overalenergyconsumption.Energyaudithelpsusinasesingthenergyeficiencylevelsof

existingequipmentandtechnologies,providingabasisforsubsequentechnologicalupgrades.We

havealsopurchasedgrenelectricitytoptimizeourenergystructuresinceAugust2024.

Intermsofwateresourcemanagement,thewaterusedinourproductionandoperationsis

sourcedfromthelocalwatersuplynetwork.WestrictlyadheretotheGeneralRulesfor

EquipingandManagingoftheWaterMeasuringInstrumentinWater-useOrganization(GB/T

24789-2022)byequipingandregularlycalibratingwatermeasuringinstruments,andasigning

dedicatedpersoneltoconductdailyinspectionsandmaintenance,andpromptlyrepairingany

leaksdetectedtoefectivelyreducepipelineloses.Wealsocontinuouslyoptimizewateresource

managementmeasurestoreducewaterconsumptioninkeyareas.

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Inourdailyoperations,theresourcesweconsumeprimarilyincludelectricity,water,and

naturalgas.Weactivelypromotenergyconservationandconsumptionreductiontoreduce

resourceusage.TheShanghaiproductionbasecomencedoperationsinMay2023,andour

productioncapacityfurtherexpandedin2024,resultingintheincreasesinthelectricity

consumption,waterconsumption,naturalgasconsumptionandpackingmaterialusedin2023and

2024.ThefolowingtablesetsforthouresourceconsumptiondataduringtheTrackRecord

Period:

YearendedDecember31,

Thremonths

endedMarch31,

MetricUnit2022202320242025

Totalelectricityconsumption

.

milionkWh97.0210.2261.767.4

Electricityconsumption

intensity

.

milionkWh/

revenueinmilion

(RMB)

0.230.170.150.17

Totalwaterconsumption

.

’000tones(t)399.31,246.81,528.3369.5

Waterconsumptionintensity

.

’000tones

(t)/revenuein

milion(RMB)

0.961.000.860.91

Totalnaturalgasconsumption

.

’000cubicmetre(m

)0.0

(1)

92.8230.826.8

Naturalgasconsumption

intensity

.

’000cubicmetre

(m

)/revenuein

milion(RMB)

0.00

(1)

0.070.130.07

Packingmaterialused

.

tones(t)5.822.532.59.3

Intensityofpacking

materialuse

.

tones(t)/revenuein

milion(RMB)

0.010.020.020.02

Note:

(1)ThenaturalgasconsumptionisexclusivelyasociatedwithShanghaiproductionbase.AsShanghaiproductionbase

wasnotinoperationin2022,thetotalnaturalgasconsumptionin2022amountedtonul,whichalsoresultsinthe

naturalgasconsumptionintensityofnul.

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RespondingtoClimateChange

Wehaveadheredtothephilosophyof“independentinovationandgrenmanufacturing”

sinceourinception,andarededicatedtocontinuouslyutilizingtheinteligentechnological

transformationandtheconstructionofsmartfactories,toachievenergyconservationand

emisionreduction,providingareferenceforenergy-savingandgrenmanufacturingdevelopment

modelsinthewidebandgapsemiconductormaterialindustry.

(cid:129)Grenproductphilosophy:Intheproductdesignphase,westrictlyadheretothe

GeneralPrincipleandRequirementsofEco-designforProducts(GB/T24256-2009),

comprehensivelyasesingthenvironmentalimpacthroughouthentireproduct

lifecycle,includingrawmaterialprocurement,production,transportation,storage,and

end-of-liferecycling.Wearecomitedtoachievingharmlesproductlifecycles,

eficientenergyutilization,andcircularmaterialusage,ensuringthatproductquality

metstandards,whilefectivelyreducingenergyandresourceconsumptionand

mitigatingenvironmentalimpact.

(cid:129)Grenproductionmodel:Byintroducingthedigitaltwintechnologiesinsmartfactories

andtransformingtheproductionproceseswiththeconceptofcirculareconomy,we

haveachievedthedigitalsimulatedproductionofthecrystalgrowth.

(cid:129)Establishmentofgrenfactories:Wehavestablishedtheorganizationstructureofthe

grenfactoryinacordancewiththeGeneralPrinciplesforAsesmentofGren

Factory(GB/T36132-2018),andformulatedtheobjectivesandresponsibilitiesofeach

department.WeregularlyconductinternalauditsinacordancewiththeSelf-Evaluation

CriteriaforGrenFactory,andcontinuouslyimplementherequirementsofgren

factoriesincombinationwiththemanagementofenvironment,energy,healthandother

systemstopromotegrendevelopment.InAugust2024,wewereawardedthe“Gren

FactoryinShandongProvince”byDepartmentofIndustryandInformationTechnology

ofShandongProvince.

(cid:129)Promotionofgrenofice:Weadvocateforpaperles,information-basedandinteligent

oficemethods,andactivelyimplementpracticalactionsforgrenoficebasedonthe

principlesofconservationandmoderationinworkatitude.

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Themetricswehaveidentifiedincludegrenhousegas(“GHG”)emisionscope1andGHG

emisionscope2.Incomparison,weanalyzed7companiesinthesemiconductormaterialsand

relatedindustryandfoundthatheiraveragetotalGHGemisions(Scope1and2)densityranged

from59tonsofCO2equivalentperRMB1milionto343tonsofCO2equivalentperRMB1

milion,demonstratingalignmentwithourperformancelevel.Amongthe7companiesinthe

semiconductormaterialsandrelatedindustrythatweanalyzed,4companiesdidnotdisclosetheir

Scope3GHGemisions.Thescope3GHGemisionsdensityfortheother3companiesranged

from140tonsofCO2equivalentperRMB1milionto370tonsofCO2equivalentperRMB1

milion.WeplantoreduceGHGemisionsdensitybyover30%comparedtothelevelin2024by

2030.Weasumedthatwecouldachievethisgoalbyactionsincludingbutnotlimitedto:(i)

procuringrenelectricityandestablishingrenewablenergygenerationfacilities;(i)reducing

theuseofliquefiedpetroleumgasandiesel;(i)introducinghigh-eficiencyandenergy-saving

equipment,andoptimizingproductionprocesestoreducenergywaste;(iv)improvingthe

lighting,airconditioningandventilationsystemswithinthefacilities;and(v)caryingout

aforestationactivitieswithinandaroundthefacilitypremises.TheShanghaiproductionplant

comencedoperationsinMay2023,andourproductioncapacityfurtherexpandedin2024,

resultinginincreasesintheGHGemisionsin2023and2024.Thefolowingtablesetsforthour

GHGemisionsduringtheTrackRecordPeriod:

YearendedDecember31,

Thremonths

endedMarch31,

MetricUnit2022202320242025

TotalGHGemisions

(Scope1and2)

.

tCO2e59,304128,441160,18241,392

DirectGHGemisions

(Scope1)

.

tCO2e150203549273

IndirectGHGemisions

(Scope2)

.

tCO2e59,154128,238159,63341,119

GHGemisiondensity

.

tCO2e/revenuein

milions(RMB)

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SocialResponsibility

ProductLiability

Wearealeaderintheproductionofwidebandgapsemiconductormaterials,focusingonthe

research,developmentandindustrializationofSiCsubstrates.LeveragingtheadvantagesofSiC

materialsincludinghighfrequency,lowlos,highvoltageresistanceandhightemperature

resistance,SiCsemiconductordevicescanimprovetheconversioneficiencyofelectricityin

productionandconsumption,achievesmalersystemvolumeandhigherpowerdensity,andreduce

thedemandforcolingsystems,therebypromotingthelow-carbontransformationofthenergy

system.Againsthebackdropofthestrategiesofcarbonpeakandcarboneutrality,theficient

useofenergyandelectrificationareinevitabletrends,andSiCsemiconductorsareacrucial

foundationforachievingtheobjectivesofcarbonpeakandcarboneutrality,andsuportingthe

developmentofnewenergy.WewilcontinuetoincreaseourR&Dinvestmentocontributetothe

developmentofChina’semiconductorindustryandtheachievementofthedual-carbonobjectives.

Weadheretothequalitypolicyof“scientificmanagement,technologicalinovation,

continuousimprovementandpursuitofexcelence”,andcomprehensivelyimplementleanquality

managementmethods,comitedtoprovidinghigh-qualityproductstourcustomers.

ProductQualityManagement

Wehaveatachedgreatimportancetoqualitydevelopment,consideringithecornerstoneof

ourbusinesgrowthsinceourinception.InacordancewiththeProductQualityLawofthePRC

andotherelevantlawsandregulations,wehaveformulatedinternalqualitymanagementsystems

andstandardstomanageandsupervisethentireproductionproces,andensureourproducts

compliancewithqualitystandards.WehavedevelopedandimplementedaZero-DefectPlan,

aimingforhigh-qualityproductsandefect-fredelivery.Ledbythemanagementeam,we

promptlyreviewmajorqualityincidenthandlingopinionsandregularlyreviewquality

managementreports,aimingtocontinuouslyimprovethequalitymanagementsystem.Toachieve

theseobjectives,wehaveformulatedaseriesofqualitymanagementsystems,includingthe

QualityManual,theEarlyQualityPlaningandControlProcedures,theFailureModeandEfect

Analysis(FMEA)ManagementMeasures,theControlProceduresforCorectiveandPreventive

ActionsandContinuousImprovement,theControlProceduresforNon-ConformingProducts,and

theControlProceduresforProductAudits.

Weoferproductreturnandexchangeservicestailoredtomethenedsandconcernsofour

customers.Ourstandardproductreturnprocedureisoutlinedinourcustomereturnmerchandise

authorization(RMA)policy.Whenacustomereportsaqualityisue,ourtechnicalteamwil

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quicklyconductqualityisueanalysis.Afteraninternalinvestigationconfirmsaproductdefect,

ourqualitycontroldepartmentwilnotifyourproductdepartmentoinitiatethereturnproces.We

didnotencounteranysignificantproductreturnsorexchangesduringtheTrackRecordPeriod.

Wehaveobtainedtwoimportantcertifications,includingIATF16949:2016andISO

9001:2015.IATF16949:2016certification,isuedbytheInternationalAutomotiveTaskForce

(IATF)andrecognizedbytheInternationalOrganizationforStandardization(ISO),istheprimary

standardforqualitymanagementsystemsinautomotivepartsandrelatedservices.Theacquisition

ofthiscertificationdemonstratesthatourdesignandproductionofSiCmaterialsfulycomply

withtherequirementsofIATF16949:2016qualitymanagementsystem,markingourentryintothe

suplychainofglobalautomotiveindustryandprovidingfavorablesuportingforthefurther

expansionofourSiCproductsintheglobalautomotiveindustry.

IntelectualPropertyProtection

Weatachighimportancetointelectualpropertymanagement,continuouslyimprovingour

capabilitiesinthecreation,transformation,aplication,protectionandmanagementofintelectual

propertytoenhanceourcorecompetitivenes.WestrictlyfolowthePatentLawofthePRCand

haveformulatedandfurtherimprovedinternalsystemsuchastheIntelectualProperty

ManagementMeasures,theManagementMeasuresforScientificandTechnologicalAchievement

Release,thePatentAplicationManagementMeasures,andthePatentRewardManagement

Measures,toimplementintelectualpropertymanagementstandardsandefectivelyprotect

intelectualproperties.Furthermore,wehavestablishedanintelectualpropertyinformation

monitoringmechanismandstrengthenedthepromotionandtrainingofintelectualproperty

protection,therebyenhancingtheawarenesofintelectualpropertyprotectionamongal

employes,andforminganintelectualpropertymanagementsystemcoveringalaspectsof

productionandoperation.

Employment

Wearecomitedtoprovidingemployeswithbeterdevelopmentoportunitiesand

benefits,folowingapeople-orientedtalentphilosophy.Wearealsocomitedtocreatinga

healthy,hapy,harmoniousandevelopmentalworkingenvironment,aimingforawin-win

situationwherethecompany’sgrowthisalignedwithemployedevelopment.

LaborStandards

WestrictlycomplywiththeLaborLawofthePRC,theLaborContractLawofthePRC,the

LawofthePRContheProtectionofMinors,andtheProvisionsontheProhibitionofUsingChild

Labor,andotherpertinentlawsandregulations.Wehaveformulatedinternalsystemsuchasthe

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EmployeHandbokandtheChildLaborandMinorManagementRegulationsandRemedial

Measures,tolegalysignlaborcontractswithemployes,andefectivelyprotectheirlegitimate

rightsandinterests.Wefirmlyprohibitheuseofchildlaborandstrictlyverifyidentity

informationduringtherecruitmentprocestoensurealnewemployesmetherequirementsof

legalworkingage.

DiversityandEqualOportunities

Wearecomitedtocreatingadiverseworkplacenvironment,andalwaysadvocateand

adheretotheprinciplesofgenderequalityandemploymentdiversity,andoposeanyformof

discriminationbasedonreligiousbeliefs,family,ethnicity,region,gender,education,disability,or

otherfactors.AsofMarch31,2025,wehaveatotalof1,313employes,ofwhich183arefemale

employes.Amongouremployes,46.5%areagedbelow30,52.6%areaged30to49,and0.9%

areaged50orabove.

OcupationalHealthandSafety

Wehavealwaysfocusedoncreatingahealthyandsafeworkingenvironmentforemployes,

strictlyfolowinginternationalsafetystandards,andhaveobtainedISO45001:2018Ocupational

HealthandSafetyManagementSystemcertification.Wehaveformulatedacomprehensiveinternal

safetymanagementsystem,includingtheSafetyProductionRegulations,theOcupationalHealth

ManagementSystem,andtheConfinedSpaceOperationSystem.Wefectivelypreventproduction

safetyacidentsthrougharobustemergencyrescuesystem,safetyinvestmentsystem,riskgrading

controlsystem,andhidendangerinvestigationandgovernancesystem.Aditionaly,weregularly

conductsafetytraining,safetyinspections,andemergencydrilstoefectivelyenhancemployes’

safetyskilsandawarenes.DuringtheTrackRecordPeriod,wehavenotexperiencedany

materialworkplaceinjuries.

Intheordinarycourseofourbusines,weusecertainradiationdevices,suchasX-raysingle

crystalorientationinstrumentandX-raydifractometer,forproductqualitycontrol.Toprotect

employesfromradiationexposure,wehaveimplementedcomprehensivemeasures,including(i)

establishingadesignatedgroupthatcloselymonitorstheuseofradiationdevices;(i)providing

training,healthmonitoringandmanagingpersonaldosimetersfortheoperatorsofradiation

devices;(i)equipingouradiationdeviceswithemergencybutons,work-in-progresindicators

andotherfeaturesthatcomplywithnationalenvironmentalprotection,ocupationalhealthand

safetystandards;(iv)developingdetailedmanagementpolicies,suchastheRadiationHealth

ManagementMeasuresandtheRadiationSafetyIncidentEmergencyResponsePlan,tostandardize

theregulationofradiationsafety;and(v)postingwarningsignsandemarcatedrestrictedzonesas

welasdeployingapropriatemonitoringinstrumentsintheworkareas.

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DevelopmentandTraining

Wefocusonthecarerdevelopmentofouremployes,establishcarerpromotionchanels

basedoncompetencyidentificationandpersonaldevelopmentaspirations,andprovide

comprehensivecarerdevelopmentresources.Weprioritizetheimprovementofemployes’overal

capabilitiesandbusineskils,andimplementathre-leveltrainingsystematheteam,

departmentandcompanylevels.Wefocusontheprofesionalcapabilitiesrequiredforemploye

positions,andhavestablishedacustomizedtrainingsystemtoefectivelymethediverse

trainingnedsofemployes,whichisconducivetotheirgrowthandimprovement.

SuplyChainManagement

Tocontinuouslyoptimizeandimprovesupliermanagement,wehavestablishedasuplier

lifecyclemanagementsystem,mobilizinginternalresourcestosuportsupliers,whichaimsto

enhancesuplychaineficiencyandensurethesmothproductionactivities.

Wearecomitedtoestablishingaresponsiblesuplychain,adheringtotheprinciplesof

“scientificmanagement,orderlyregulation,continuousimprovement,andpursuitofexcelence”.

WehaveformulatedtheinternalpoliciesincludingtheControlProceduresforSuplier

ManagementandtheSuplierAcesManagementMeasures,whichclearlystipulatethe

requirementsforsuplieraces,investigation,selection,evaluationandoptimization.

Aditionaly,wehavestablishedanevaluationsystemincludingESGcriteriaforsuplier

self-inspectionandsupervision,tostrengthensupliermanagement,promotesuplierstofolow

businesethicsandconductbusinesinaresponsiblemaner,ensurethathepartnersinthe

suplychainalignwithourphilosophyintermsofethics,safety,health,laborstandards,

environmentalprotection,amongothers,andpromotethesafetyandstabilityofthesuplychain.

WefocusontheESGperformanceofoursupliersandconsideritasakeyevaluation

criterion.ThemainmeasureswehaveadoptedforsuplierESGmanagementincludebutarenot

limitedto:

(cid:129)RequiringsuplierstosigntheCSR(CorporateSocialResponsibility)Agrementand

theGuaranteofNon-UseofEnvironmentalyHarmfulSubstances,whichinclude

requirementsforenvironmentalprotection,labor,andhumanrights;

(cid:129)Requiringsuplierstominimizepackagingmaterialsintheproductionproceswhile

ensuringcompliance;

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(cid:129)Ensuringthatheuseofhazardousubstancescomplieswithnationalandinternational

requirementsandiscontinuouslyvalidatedthroughregularupdatesofrelevant

certificates;

(cid:129)Prioritizingcoperationwithsupliersthathavenvironmentalmanagementsystem

certificationsinsuplierevaluations,reachingaconsensusoneficientenergyand

resourceutilization;

(cid:129)Asesingsupliers’energyconsumptionlevels,suportingtheminimprovingenergy

managementsystems,andjointlyachievingobjectivesofenergyconservationand

carbonreductionwithupstreamsupliers;and

(cid:129)Providingenergyconservationmanagementrainingandothersuportingservicestokey

suplierstoenhancetheirawarenesofenergyconservationandemisionreductionand

theirenergymanagementcapabilities.

Anti-Coruption

Weatachgreatimportancetobusinesethicsmanagementandstrictlyadheretothe

Anti-UnfairCompetitionLawofthePRC,theInterimProvisionsoftheStateAdministrationfor

IndustryandComerceonProhibitingComercialBribery,andotherelevantlawsand

regulations.Weadvocatefaircompetition,andfirmlyoposecomercialbriberyandindustry

monopolies,aimingtoestablishafair,justandtransparentmarketcompetitionenvironment.We

strengthenthesupervisionofworkqualityandpowerofmanagementpersonelinvarious

departments,establishacomplainthandlingmechanism,arangeforthesupervisionandaudit

departmentstoverifyalcomplaints,andfulfiltheobligationsofinformingcomplainantsofthe

resultsandprotectingcomplainants.

Wecontinuouslystrengthenlegalandregulatoryeducationonanti-comercialbribery,and

haveformulatedinternalsystemsuchastheIntegrityManagementSystemandtheGiftandCash

ManagementMeasures,topreventheocurenceofilegalandisciplinaryviolationsand

comercialbribery.AsoftheLatestPracticableDate,wehavenothadanylitigationcasesinthis

regard.

ComunityInvolvement

AstheCompanygrows,weactivelycontributetothedevelopmentoflocalcomunities,

engageinsocialwelfareactivities,andfulfilourcorporatesocialresponsibility.Forexample,in

September2022,wecalonalemployestoparticipateinthe99PublicWelfareDayactivities,

andraisedatotalofoverRMB40,000indonations.InDecember2023,wedonatedRMB20,000to

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theEducationDevelopmentFoundationofQiluUniversityofTechnologyinShandongProvince.

InDecember2023,wedonatedrescuesupliesincludingmedicines,spaceheaters,tentsand

foldingbedstothearthquake-strickenareasinGansuProvince.

PROPERTIES

PropertiesWeOwned

WeownandocupycertainlandparcelsandbuildingsinthePRCforourbusines

operations.Thesepropertiesareusedfornon-propertyactivitiesasdefinedunderRule5.01(2)of

theListingRules.AsoftheLatestPracticableDate,saveforthelandparcelsocupiedbyour

residentialproperties,weownedfourlandparcelswithatotalsiteareaofaproximately245,000

sq.m.and22propertieswithatotalgrosflorareaofaproximately214,212sq.m.inthePRC.

Thesepropertiesareprimarilyusedasourproductionfacilities,warehouses,oficesandemploye

dormitoriestosuportourbusinesoperations.Se“—LegalProcedingsandCompliance—

HistoricalNon-complianceIncidents—PropertiesWeOwnedandLeased.”

PropertiesWeLeased

AsoftheLatestPracticableDate,weleasedthrepropertiesfromexternalthirdpartieswith

anagregategrosflorareaof16,276.8sq.m.inthePRCforuseasourproductionfacilitiesand

ofices.Se“—LegalProcedingsandCompliance—HistoricalNon-complianceIncidents—

PropertiesWeOwnedandLeased.”

LICENSES,APROVALSANDPERMITS

AsoftheLatestPracticableDate,asadvisedbyourPRCLegalAdvisor,wehadobtainedal

materialicensesandpermitsrequiredforourbusinesoperationsinthePRC,suchastheradiation

safetylicenserequiredforusersofradiationdevicesunderthePRCRadioactivePolution

PreventionandControlLawasweuseX-raysinglecrystalorientationinstrumentandX-ray

difractometerinthecourseofproductqualitycontrol,andthecustomsregistrationforimportand

exportconsignesandconsignors,andsuchlicensesandpermitshadremainedinfulefect.We

believethathereisnomaterialimpedimentorenewourlicensesandpermits.

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LEGALPROCEDINGSANDCOMPLIANCE

LegalProcedings

Inthecourseofourgeneralbusinesoperations,wemaybeinvolvedincontractdisputes,

litigationorotherlegalprocedures.DuringtheTrackRecordPeriodandasoftheLatest

PracticableDate,noneofourCompany,anyofoursubsidiariesoranydirectorshadbeninvolved

inanymaterialitigation,arbitrationorclaimthatmayhaveamaterialadversefectonour

financialconditionoroperatingresults.

HistoricalNon-complianceIncidents

DuringtheTrackRecordPeriodanduptotheLatestPracticableDate,wehadnot

experiencedanynon-complianceincidentwhich,individualyortakenasawhole,intheopinion

ofourDirectors,islikelytohaveamaterialandadversefectonourbusines,financialcondition

oresultsofoperations.

Thesumarybelowsetsoutincidentsofhistoricalnon-compliancewithaplicable

regulationsduringtheTrackRecordPeriod.OurDirectorsbelievethatbelownon-compliance

incidentsdidnotandwilnothaveanymaterialadverseimpactonourbusinesoperationsor

financialperformance.

SocialInsuranceandHousingProvidentFunds

DuringtheTrackRecordPeriod,wedidnotmakefulcontributionstosocialinsuranceand

housingprovidentfundsforcertainofouremployesasrequiredbyrelevantPRClawsand

regulations.Consideringthatsuchshortfalinsocialinsuranceandhousingprovidentfund

contributionsacountedforlesthan0.5%ofourtotalrevenuethroughoutheTrackRecord

Period,wehadnotmaderelevantprovisions.AsadvisedbyourPRCLegalAdvisor,acordingto

theSocialInsuranceLawofthePRC,wemaybeorderedtopayfortheshortfalswithina

prescribedtimeperiodalongwiththelatepaymentfesandbeimposedofafineifsuchpayment

isnotmadewithintherequiredtimeperiod,themaximumpenaltyamountbeingthretimesofthe

cumulativeshortfalinoursocialinsurancecontribution.Inadition,acordingtotheRegulations

ontheAdministrationofHousingProvidentFund,wemaybeorderedtopayfortheshortfals

withinaprescribedtimeperiod,ifthepaymentisnotmadewithinsuchtimeperiod,anaplication

maybemadetothecourtsintheChinesemainlandforcompulsoryenforcement.

Inadition,asofDecember31,2022,2023,2024andMarch31,2025,wengaged

third-partyagenciestomakesocialinsuranceandhousingprovidentfundcontributionsforthre,

six,fiveandfivemployes,respectively,whichwasnotinstrictcompliancewithaplicablePRC

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lawsandregulations.AsadvisedbyourPRCLegalAdvisor,ifthevalidityofsucharangementsis

chalengedbyrelevantcompetentauthorities,wemightbesubjectoaditionalcontributions,late

paymentfesand/orpenaltiesrequiredbyrelevantPRClawsandregulationsforfailingto

dischargeourobligationsinrelationtopaymentofsocialinsuranceandhousingprovidentfundsas

anemployerorbeorderedtorectifysuchpractice.

Se“RiskFactors—RisksRelatingtoOurIndustryandBusines—Anyfailuretomake

adequatecontributionstovariousemployebenefitplansasrequiredbyPRCregulationsmay

subjectustopenalties.”

Toensurecompliancewiththesocialinsuranceandhousingprovidentfundcontribution

requirementsunderelevantlawsandregulationstothextentpracticableinthefuture,weplanto

(i)enhanceourinternalcontrolpoliciespursuantowhichourlegalandhumanresource

departmentswilregularlymonitorthecompliancestatusofoursocialinsuranceandhousing

providentfundcontributions;(i)strengthenthetrainingofourpersonel,includingtrainingon

variouscompliance-relatedtopicsforouremployes;and(i)periodicalycheckthelatest

developmentinPRClawsandregulationsrelatingtosocialinsuranceandhousingprovidentfunds.

Wehavealsobenintheprocesofadjustingthecontributionbaseofhousingprovidentfundsfor

ouremployesinanefortocomplywithrelevantPRClawandregulations.Astheadjustmentof

thehousingprovidentfundcontributionbaseistypicalymadeinadesignatedtimeachyearand

suchtimevariesbyregion,wexpectpartialadjustmentocomenceinJuly2025.

PropertiesWeOwnedandLeased

PropertiesWeOwned

AsoftheLatestPracticableDate,wehadnotobtainedtherelevantitlecertificatesofive

propertiesthatweowned,primarilydueto(i)thelackofpre-constructionfilingandincomplete

constructionqualityandsafetysupervisionprocedures,or(i)ourfailuretocompletethefiling

withrelevantcompetentauthoritieswithin15daysafterpasingthecompletionaceptance

inspection.AsadvisedbyourPRCLegalAdvisor,thesepropertiesthatlackpre-constructionfiling

andcompleteconstructionqualityandsafetysupervisionproceduresarecompliantwiththe

relevantsafetyrequirementsinalmaterialrespects,consideringthat(i)acordingtotheapraisal

reportisuedbyanindependentconstructionengineringqualityinspectionandtestinginstitution,

thesepropertiesmethesafetyrequirementsofthelatestnationalstandardsandspecifications,do

notafectheoveralsafetyandcanbeusedsafelyinacordancewiththeircurentfunctionality;

(i)duringtheTrackRecordPeriod,wewerenotsubjectoanyadministrativepenaltiesorsevere

instancesofbreachoftrustinrelationtohousingandrural-urbanconstruction;and(i)the

competentgovernmentalauthorityhasconfirmedinwritingthatitwilasistusinenhancingour

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constructionprocedurestoensurefulcompliancewithaplicablelawsandregulations.Wexpect

torectifyourlackofpre-constructionfilingandcompletethepost-completionaceptance

inspectionfilingbyDecember2025.

PropertiesWeLeased

AsoftheLatestPracticableDate,wehadnotcompletedtheregistrationofleaseagrements

foralthreleasedpropertieswiththerelevantcompetentauthoritiesinacordancewithaplicable

lawsandregulationsinChina.AsadvisedbyourPRCLegalAdvisors,thelackofregistrationof

leasefilingdoesnotafectvalidityofleaseagrements,oresultinusbeingrequiredtovacate

fromtheseleasedproperties,butwemaybeorderedbyrelevantcompetentauthoritiestocomplete

theregistrationwithinaprescribedtimeperiod,andmaybesubjectofinesfromRMB1,000to

RMB10,000foreachleaseagrementhatwefailtoregisterwithinthetimeperiod.Nevertheles,

asadvisedbyourPRCLegalAdvisors,ifthefilingoftheseleasefilingscanbecompletedwithin

theprescribedtimeperiodorderedbytherelevantcompetentauthorities,theriskthatamaterial

penaltybeingimposedonuswithrespectourleasedpropertieswouldberemote.

AsoftheLatestPracticableDate,thelandlordsoftwofourleasedpropertieshadnot

provideduswiththecompleteandvalidpropertyownershipcertificates.Inadition,thecurent

usageofoneoftheleasedpropertiesisdiferentfromtheplanedusagestatedonitstitle

certificate,primarilybecause,althoughsuchleasedpropertyisdesignatedforesidentialuse,its

landlordunilateralymodifieditintoanoficespaceandstipulatedintheleaseagrementhatitis

tobeusedforoficepurposes.Thismayresultinthelandlordbeingorderedtorectifywithina

certaintimeperiod.Nevertheles,consideringthatheseleasedproperties(i)haverelativelysmal

grosflorarea;and(i)areprimarilyusedasoficespaceratherthanproductionfacilitieswith

abundantavailablealternativesinthemarket,ourDirectorsareoftheviewthatifourlease

agrementsaredemedinvalid,orifwenedtovacatetheseleasedproperties,wecouldtimely

relocatetoalternativepremisesatrelativelylowrelocationcostsandenterintoleaseagrements

oncomparablecomercialterms,whichwouldnothaveanymaterialadverseimpactonour

businesoperations.

TARIF,TRADERESTRICTIONANDEXPORTCONTROLIMPLICATIONS

U.S.TarifImplications

OnDecember23,2024,theOficeoftheU.S.TradeRepresentative(the“USTR”)anounced

anewinvestigation(the“Section301Investigation”)toexamineChineseactionsalegedlyrelated

totargetingofthesemiconductorindustryfordominanceandtheimpactofsuchactionsonthe

U.S.underSection301oftheTradeActof1974(asamended).IftheUSTRfindsthatChina’s

actionsareunreasonableordiscriminatory,itmayimposetarifs(the“Section301Tarifs”)ona

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vastrangeofproducts.TheSection301TarifscouldcoverChina-originsemiconductorsandany

producthatcontainsChina-originsemiconductors.ThehearingoftheSection301Investigation

wasconvenedonMarch11,2025,andtheUSTRhasnotyetmadeanyfurtherdecisionsasofthe

LatestPracticableDate.OnFebruary1,2025,PresidentTrumpimposeda10%tarif(the“IEPA

Tarif”)onalproductsimportedtotheU.S.fromChina.OnApril2,2025,PresidentTrump

imposedatwo-tiereciprocaltarif(the“ReciprocalTarif”andtogetherwiththeSection301

TarifandtheIEPATarif,the“Tarifs”)onaproximately60countries,includingChina,which

consistsofabaselinetarifof10%andaditionalindividualizedtarifsbasedoneachcountry’s

tradedeficitswiththeU.S.Afterseveralroundsofadjustments,the10.0%ReciprocalTarifon

godsimportedfromChinaremainedbutheaditional24.0%tarifhadbentemporarily

suspendedonMay14,2025for90days.OnMay28,2025,theUnitedStatesCourtof

InternationalTradeheldthatheIEPAdoesnotauthorizeanyoftheworldwide,retaliatoryor

trafickingtariforders,vacatingthosethatwerechalenged.FolowingtheTrumpadministration’s

imediateapeal,theU.S.CourtofApealsfortheFederalCircuit(the“CAFC”)grantedthe

Trumpadministration’srequestforanadministrativestayonJune10,2025andwilholdanoral

argumentonJuly31,2025.Asuch,theIEPATarifsremainedinefectasofthedateofthis

prospectus.

AsadvisedbyourU.S.ExportControlandSanctionsCounsel,consideringthat(i)duringthe

TrackRecordPeriod,wehadonlyexportedsixandahundredpiecesofSiCsubstratestotheU.S.

in2022and2024,respectively;(i)ourproductswerenotincludedonthelistsofproductsthatare

subjectotheSection301TarifsasmaintainedbytheUSTRasoftheLatestPracticableDate;

(i)therevenuethatwederivedfromourSiCsubstratesthatweredirectlyexportedtotheU.S.

onlyacountedforlesthan0.1%ofourtotalrevenueduringtheTrackRecordPeriod;and(iv)

sincetheimpositionoftheTarifs,noneofourcustomershadcanceledtheirorderswithusasof

theLatestPracticableDate,ourDirectorsdonotexpectheSection301InvestigationortheTarifs

tohaveanydirectmaterialadverseimpactonourbusinesoperations,financialperformanceand

planstoconstructoverseasproductionplants.

Nonetheles,wecanotruleouthepotentialindirectimpactoftheTarifsonus,giventhat

someofourcustomersandtheirdownstreamclients(the“Customers”)mayhavesalestotheU.S.

andmayberesponsibletopaytheTarifs,whichmayafectheirdemandforourproducts.The

magnitudeofsuchindirectimpactdependsonseveralfactors,suchastheCustomers’relianceon

theU.S.marketandtheirbusinesadjustmentsinresponsetoTarifs.WeandtheJointSponsors

haveactivelyengagedinconversationswithourU.S.ExportControlandSanctionsCounseland

Frost&SulivantostayinformedabouthelatestU.S.tarifpoliciesaswelastheirindirector

knock-onimpactonthebusinesoperationandfinancialperformanceoftheCustomersandus.In

adition,wehaveactivelyengagedincomunicationwithourcustomersandcloselymonitored

theirorderstatusestoidentifyanyunusualreductionsinordervolumeandinstancesoforder

cancelationsorterminationofpurchaseagrementsbyourcustomers.

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Tothebestofourknowledge,asoftheLatestPracticableDate,(i)wehadnotexperienced

anymaterialadversechangesinourordervolume,productprice,customerpaymentorlogistics

arangements;(i)wehadnotreceivedanyrequestsfromourcustomerstocancelordersor

suspendeliveryofourSiCsubstratesbecauseoftheTarifs;and(i)noneofourmajor

customers,whowerealglobalyleadingpowersemiconductormanufacturers,soldtheirproducts

exclusivelytotheU.S.Also,onlyasmalportionofourproductswereindirectlyexportedtothe

U.S.Acordingtourestimation,aproximately3.2%,9.0%and10.5%ofourSiCsubstratesin

termsofrevenuewereindirectlyexportedtotheU.S.aspartofendproductsin2022,2023and

2024,respectively.Thesepercentagesarecalculatedbymultiplying(i)ourfivelargestcustomers’

salesintheU.S.asapercentageoftheirtotalsalesinagivenyear,basedontheirpublicfilings

andacordingtoFrost&Sulivan;by(i)therevenuethatwederivedfromourfivelargest

customersasapercentageofourtotalrevenueinthesameyear.

However,giventhatwedonotposesknowledgeof(i)thedirectimpactoftheTarifson

theCustomers;(i)theCustomers’marketshare,revenueandprofitabilityintheU.S;and(i)the

businesadjustmentsmadebytheCustomers,ourasesmentaboveoftheTarifs’indirector

knock-onimpactonourbusinesoperationsandfinancialconditionremainsubjectouncertainty

andchangeinthefuture.Se“RiskFactors—RisksRelatingtoOurIndustryandBusines—Our

busines,financialconditionandresultsofoperationsmaybematerialyandadverselyafectedby

internationalpolicies,internationalexportcontrolsandeconomicsanctions.”

U.S.TradeRestrictionImplications

TheBureauofIndustryandSecurity(the“BIS”)publishesvarioustraderestrictionlists,

whichincludecertainforeignpersons,entitiesorgovernmentsubjectospecificlicense

requirementsforthexportortransferofspecifieditems.Themaintraderestrictionslististhe

SpecialyDesignatedNationalsandBlockedPersons(the“SDNList”),whichismaintainedbythe

OficeofForeignAsetsControl.TheSDNListpubliclyidentifiespersonsdeterminedbytheU.S.

governmentobeinvolvedinactivitiesthathreatenorundermineU.S.foreignpolicyornational

securityobjectives.PersonsontheSDNListcouldbethosewhoareownedorcontroledby,or

actingfor,oronbehalfof,targetedcountries;orthosewho,suchasteroristsandnarcotics

trafickersdesignatedunderprogramsthatarenotcountry-specific.AsetsofSDN-designated

personsareblockedandU.S.personsaregeneralyprohibitedfromdealingwiththem.

Oneofourcustomers(the“SDNCustomer”)waslistedontheSDNListinDecember2023.

Nonetheles,consideringthat(i)ourtransactionwiththeSDNCustomercomencedinJanuary

2020andconcludedinSeptember2022,beforethedesignationofsuchcustomerontheSDNList;

(i)wehadnotenteredintoanynewtransactionwiththeSDNCustomerafterSeptember2022;

and(i)theSDNCustomerwasnotsanctionedbetwenJanuary2020andSeptember2022,our

U.S.ExportControlandSanctionsCounselisoftheviewthatourtransactionwiththeSDN

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Customerdidnotconstituteasanctionedactivity.Asuch,ourDirectorsareoftheviewthathe

designationoftheSDNCustomerontheSDNListin2023doesnothaveanymaterialadverse

impactonourbusinesoperations,financialpositionorfutureprospects.

In2022,wealsosoldSiCmaterialstoanothercustomerofours(the“NS-CMICustomer”)

thatwaslistedontheNon-SDNChineseMilitary-IndustrialComplexCompaniesList(the

“NS-CMICList”).Nonetheles,consideringthatheNS-CMICListprimarilyprohibitsU.S.

personsfrompurchasingorselingpubliclytradedsecuritiesofentitiesthereon,andour

transactionswiththeNS-CMICustomerweresolelysalesofSiCsubstrates,whichfeloutside

thescopeoftheNS-CMICList,ourU.S.ExportControlandSanctionsCounselisoftheviewthat

ourtransactionswiththeNS-CMICustomerdidnotconstituteasanctionedactivity.Asuch,our

Directorsareoftheviewthatsuchtransactionsdoesnothaveanymaterialadverseimpactonour

businesoperations,financialpositionorfutureprospects.

U.S.ExportControlImplications

Inaditiontothetraderestrictionsabove,theBISalsomaintainslistsofindividualsand

entitiesubjectoenhancedexportcontrolrestrictions.AmongthemistheEntityListhatincludes

foreignpersonsonwhomspecifictraderestrictionsareimposed,suchasbusineses,research

institutions,governmentandprivateorganizations,individualsandotherlegalentities.Foreign

personsontheEntityListhavelimitedacestocertainU.S.-origingods,softwareand

technologies,itemsthatcontaincertainportionsofU.S.-origingods,softwareortechnologies,as

welasforeigndirectproductsofcertainU.S.-originsoftware,technologiesandequipment.

Oneofourcustomers(the“EntityListCustomer”)waslistedontheEntityList.

Nonetheles,consideringthat(i)theSiCsubstratesthatwesoldweremanufacturedinthePRC

withoutincorporatingwithcontroledU.S.-origincomoditiesorbundlingwithcontroled

U.S.-originsoftware;and(i)noneofthequipmenthatweusedisubjectotheForeignDirect

ProductRuleandnoU.S.originand/orU.S.-brandedequipmenthasbenusedforproduct

detectioninvolvingforeignpersonsontheEntityList,ourU.S.ExportControlandSanctions

CounselisoftheviewthatourtransactionwiththeEntityListCustomerwouldnotbesubjecto

theEAR.Asuch,ourDirectorsareoftheviewthatsuchtransactionsdoesnothaveanymaterial

adverseimpactonourbusinesoperations,financialpositionorfutureprospects.

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InternalControlMeasures

Tomonitorthelatestlegalandregulatorydevelopmentsandtomitigateouriskexposureto

tarifs,exportcontrolsandeconomicsanctions,weplantoimplementhemeasuresbelow:

(cid:129)ExportComplianceComite.Weplantoestablishadedicatedexportcompliance

comiteledbyourseniorexecutivesfromourinvestmentandcompliance

departments.Thecomitewilprimarilyberesponsibleof(i)conductingmetingsto

reviewandupdatecompliancestrategiesinresponsetothelatestdevelopmentintarifs,

exportcontrolsandeconomicsanctions;(i)implementingtrainingprogramswith

periodicupdatesforouremployes;(i)setingkeyperformanceindicatorstomeasure

thefectivenesofourinternalcontrolmeasures;and(iv)providingdetailedmonthly

reportstoseniormanagementandtheBoard;

(cid:129)RegulatoryMonitoring.Weplantoengagexportcontrolandsanctionconsultantsto

providediverseperspectivesonregulatorychangesandregularlyreviewboth

internationalandregionalupdatesfromthem;

(cid:129)MandatoryCompliance.Weplantoimplementarobustcodeofconducthatexplicitly

adresesexportcontrolcompliance,requiringalemployesandmanagementosign

anualcompliancecertifications;

(cid:129)SuplyChainDueDiligence.Weplanto(i)improveoursupliervetingprocesto

includeperiodicauditsandsitevisits;(i)utilizesmartscreningtolstocontinuously

monitorsupliersagainstsanctionlists;and(i)conducthoroughduediligenceonthe

materials,equipmentandtechnologyprovidedbyoursupliers;

(cid:129)InternalAuditsandRiskAsesment.Weplanto(i)conductbi-anualinternalauditsof

exportcontrolcompliancemeasures;(i)performregulariskasesmentstoidentify

potentialvulnerabilitiesinthecomplianceprogram;(i)engagexternalauditorsfor

anualthird-partyreviewsofthecomplianceprogram;and(iv)developandmaintaina

comprehensiveriskregisterwithmitigationstrategies;

(cid:129)IncidentResponseandCorectiveActions.Weplantodevelopadetailedincident

responseplanforpotentialexportcontrolviolations,enablingrapidresponseto

complianceisuesandtimelyimplementationofcorectiveactions;and

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(cid:129)ContinuousImprovement.Weplantobenchmarkourinternalcontrolmeasuresagainst

industrybestpracticesandourpers,sekingregularfedbackfromemployes,

supliersandourstakeholdersonthefectivenesofourexistinginternalcontrol

measures.

RISKMANAGEMENTANDINTERNALCONTROL

Wearecomitedtomaintainingastrongriskmanagementandinternalcontrolsystemto

safeguardouroperations.Ourinternalcontrolsarecontinuouslyrefinedtoensurecomplianceand

efectivenes,suportedbyperiodicreviewsofouriskmanagementpolicies.Weprioritizelegal

compliance,asetprotection,andtheintegrityofourfinancialreporting,alwhilenhancing

operationaleficiencytoachieveourstrategicobjectives.Aninternalauditdepartmentisinplace

toindependentlyoversetheseareasinacordancewithlegalandregulatoryrequirements,

folowingprinciplesofobjectivityandimpartiality.OurBoardisresponsibleforestablishingrisk

managementmechanismsandoverseingoveralriskmanagementpractices.OurDirectorsbelieve

thatourcurentinternalcontrolsarebothadequateandefective.

Wemanageoperationalrisks,whichprimarilyencompasespotentialfinancialosesfrom

flawedinternalproceses,humanerors,ITfailures,orexternalevents,throughacomprehensive

aproachthatdelegatesresponsibilitiesandestablishesclearincentives.Byidentifying,measuring,

monitoring,andmitigatingoperationalrisks,westrivetominimizepotentialoses.

Complianceriskinvolvesthethreatoflegalsanctionsandpotentialfinancialandreputational

damagefromfailingtoadheretolawsandregulations.Ourproceduresensurefective

identificationandmanagementofcomplianceriskswhileproactivelypreventingincidents.Our

legaldepartmentreviewsalcontractsthoroughlytoensurecompliance,andwecontinuously

monitorelevantchangesinlawsandregulations.

Asatechnology-focusedcompany,wemayfaceclaimsrelatedtointelectualpropertyrights.

Tomanageintelectualpropertyrisk,wehavestablishedinternalpoliciesgoverningthe

acquisition,maintenance,andlicensingofintelectualproperty.Ourlegaldepartmentconducts

extensiveanalysesofR&Doutcomestoidentifypotentialinfringementsandensurecompliance.

Anti-coruptionriskinvolvesthepotentialforunethicalbehavior,suchasbribery,which

couldharmourinterests.Wehaveimplementedthoroughanti-coruptionpoliciesanda

whistleblowermechanismforeportingmisconductanonymously.Violationsofthesepolicies

resultinapropriatedisciplinaryaction,andweprovideinternaltrainingtoalemployeswhile

kepingstakeholdersinformedofourpractices.

BUSINES

---

Toensurethefectivenesofouriskmanagementpolicies,wehavestablishedanAudit

Comitetoverseourfinancialreportingandinternalcontrolsystems.Incolaborationwith

ourinternalcontrolandauditdepartments,thecomitereviewsthefectivenesofoursystems

andadresesidentifiedweakneses,reportingsignificantisuestotheBoardinatimelymaner.

INTELECTUALPROPERTY

Oursucesandcompetitiveadvantagesdependinpartonourabilitytodevelopandprotect

ourcoretechnologiesandintelectualproperty.Weownalargeportfoliofintelectualproperty,

includingpatents,registeredtrademarks,confidentialtechnicalinformationandexpertiseinthe

developmentofSiCsubstrates.

Werelyonacombinationofpatents,copyrights,trademarklaw,tradesecretprotectionand

confidentialityagrementswithcustomers,supliersandemployestoprotectourintelectual

propertyrights.Wehavealsoadoptedacomprehensivesetofinternalrulesforintelectual

propertymanagement.Theseguidelinesetoutheobligationsofouremployesandcreatea

reportingmechanisminconectionwiththeprotectionofourintelectualproperty.Asofthe

LatestPracticableDate,ourR&Defortshadacumulated503patentsand176patentaplications

(including44PatentCoperationTreaty(PCT)patentaplications).Ourpatentsandpatent

aplicationsconsistof360inventionpatentsand319utilitypatents.Inadition,asoftheLatest

PracticableDate,wehad50registeredtrademarks,63registeredcomputersoftwarecopyrightsand

tworegisteredomainame.

Therecanbenoasurancethatourintelectualpropertyprotectionefortswilbesucesful.

Evenifourefortsaresucesful,wemayincursignificantcostsindefendingourights.From

timetotime,thirdpartiesmayinitiatelitigationagainstusaleginginfringementoftheir

proprietaryrightsordeclaringtheirnon-infringementofourintelectualpropertyrights.Se“—

LegalProcedingsandCompliance—LegalProcedings”,and“RisksRelatingtoOurIndustry

andBusines—Ourbusinesdependsonourabilitytoprotectourintelectualpropertyrights,and

wemaybesubjectointelectualpropertyinfringementandotherclaimsbythirdpartiesinthe

PRCorotherjurisdictions,which,ifsucesful,couldcauseustopaysignificantdamagesand

incurothercosts.”

AsadvisedbyourPRCLegalAdvisor,wehadnotbeninvolvedinanymaterialdisputeor

legalprocedinginrelationtointelectualpropertyrightsduringtheTrackRecordPeriodandup

totheLatestPracticableDate.

BUSINES

---

THECOVID-19PANDEMIC

DuringtheCOVID-19pandemic,weimplementedvariouspreventivemeasures,suchas

enhancedpersonelacescontrolandisinfectionofpublicareas.Wealsoadoptedaclosed-of

productionmethod,whereouremployeslivedinourfactorypremisesandwedynamicaly

adjustedourinventoryofcriticalrawmaterialsbasedonsuplyandlogisticsconditions.Asa

result,wedidnotexperienceanyproductionhaltduringtheCOVID-19pandemic.Asuch,our

DirectorsareoftheviewthatheCOVID-19pandemicdoesnothaveanymaterialadversefect

onourbusinesoperations,financialpositionorfutureprospects.

In2022,ourtotalexpenditurerelatingtotheCOVID-19pandemicamountedto

aproximatelyRMB9.8milion,whichprimarilyconsistedof(i)apandemicsubsidyofRMB8.0

milionfortheconstructionofourShanghaiproductionbase;(i)apandemicsubsidyof

aproximatelyRMB1.3milionforouremployes;and(i)expensesofaproximatelyRMB0.5

milionforthepurchaseofacemasks,disinfectantandothersanitizingequipment.

BUSINES

---

BOARDOFDIRECTORS

OurBoardofDirectorscomprisesofnineDirectors,includingthrexecutiveDirectors,

threnon-executiveDirectorsandthreindependentnon-executiveDirectors.OurDirectorserve

atermofthreyearsandmaybere-electedforsucesivereapointments.Themajorpowersand

functionsoftheBoardinclude,butarenotlimitedto,conveningthegeneralmetings,presenting

reportstothegeneralmetings,implementingtheresolutionspasedathegeneralmetings,

determiningtheCompany’soperationalplansandinvestmentplans,determiningtheCompany’s

anualfinancialbudgetsandfinalacounts,formulatingprofitdistributionplansandlosrecovery

plans,determiningtheCompany’sinternalmanagementsystemsandexercisingsuchotherpowers

andfunctionsasconferedbytheArticlesofAsociationandasauthorizedbythegeneral

metings.

ThefolowingtablesetsoutinformationinrespectofourDirectors:

NameAgePosition/Title

DateofFirst

Apointmentas

aDirector

TimeofJoining

ourGroupRolesandResponsibilities

Relationshipwith

Directors,

Supervisorsand

Seniormanagement

ExecutiveDirectors

Mr.ZongYanmin

(宗艳民)

.

61ChairmanoftheBoard,

executiveDirectorand

generalmanager

November2,

November2,

Responsiblefor

formulatingtheoveral

developmentstrategies,

businesdevelopment

andmanagementofour

Group

None

Mr.GaoChao

(高超)

.

38ExecutiveDirectorand

chieftechnologyoficer

August15,

July1,2014Responsibleforoverseing

theR&Dstrategy

management,project

developmentand

managementofour

Group

None

Mr.WangJunguo

(王俊国)

.

46ExecutiveDirectorand

jointcompanysecretary

July2,2025August6,

Responsibleforcorporate

governanceand

informationdisclosureof

ourGroup

None

DIRECTORS,SUPERVISORSANDSENIORMANAGEMENT

---

NameAgePosition/Title

DateofFirst

Apointmentas

aDirector

TimeofJoining

ourGroupRolesandResponsibilities

Relationshipwith

Directors,

Supervisorsand

Seniormanagement

Non-executiveDirectors

Mr.QiuYufeng

(邱宇峰)

.

65Non-executiveDirectorNovember7,

November7,

Fulfilmentofdirector’s

dutiesinacordance

withlegalrequirements

andrelevantbylaws

None

Ms.LiWanyue

(李婉越)

.

54Non-executiveDirectorFebruary19,

February19,

Fulfilmentofdirector’s

dutiesinacordance

withlegalrequirements

andrelevantbylaws

None

Mr.FangWei

(方伟)

.

50Non-executiveDirectorFebruary29,

February29,

Fulfilmentofdirector’s

dutiesinacordance

withlegalrequirements

andrelevantbylaws

None

IndependentNon-executiveDirectors

Mr.LiHonghui

(李洪辉)

.

61Independentnon-executive

Director

February29,

February29,

Supervisingandproviding

independentopinionand

judgmentotheBoard

None

Ms.LiuHua

(刘华)

.

56Independentnon-executive

Director

February29,

February29,

Supervisingandproviding

independentopinionand

judgmentotheBoard

None

Mr.LaiKwok

HungAlex

(黎国鸿)

.

61Independentnon-executive

Director

February19,

February19,

Supervisingandproviding

independentopinionand

judgmentotheBoard

None

ExecutiveDirectors

Mr.ZongYanmin(宗艳民),aged61,isthechairmanoftheBoard,executiveDirectorand

generalmanageroftheCompany.HewasapointedasaDirectoronNovember2,2010andwas

re-designatedasanexecutiveDirectoronFebruary19,2025,whichwilcomeintoefectuponthe

Listing.

DIRECTORS,SUPERVISORSANDSENIORMANAGEMENT

---

Mr.Zonghasmorethan35years’experienceintechnologyresearchandevelopmentand

industrializationofsemiconductormaterials,engineringandcorporatemanagement.Priorto

establishmentofourGroup,Mr.ZongfoundedJinanTianyeEngineringMachineryCo.,Ltd.(济

南天业工程机械有限公司)inOctober2002andservedasthechairmanoftheboardofdirectors

andgeneralmanagerfromOctober2002toOctober2020,andthechairmanoftheboardof

directorsinceOctober2020.InNovember2010,Mr.ZongfoundedSICMaterialsCo.,Ltd.(山

东天岳先进材料科技有限公司),ourpredecesor,andsucesivelyservedasthechairmanofthe

Board,executiveDirectorandgeneralmanagerfromNovember2010toNovember2020.Since

November2020,Mr.ZonghaservedasthechairmanoftheBoard,Directorandgeneralmanager

oftheCompany.Mr.ZongisthegeneralandexecutivepartnerofShanghaiMaimingandShanghai

Zhuao,ouremployeshareholdingplatforms,andalsocurentlyservesasexecutivedirectorand/or

generalmanagerinseveralsubsidiariesofourCompany.Mr.Zonghasalsoservedasthevice

presidentofConfuciusFoundation(至圣孔子基金会)sinceOctober2023.

Mr.Zongreceivedhisbachelor’sdegreinsilicatengineringfromShandongInstituteof

lightIndustry(山东轻工业学院)(curentlyknownasQiluUniversityofTechnology(齐鲁工业大

学)inthePRCinJuly1987.Mr.ZonghasbenqualifiedasaSeniorEnginer(正高级工程师)

byShandongProvinceEngineringandTechnologyPositionQualificationSeniorApraisal

Comite(山东省工程技术职务资格高级评审委员会)inMarch2020.

Mr.GaoChao(高超),aged38,isanexecutiveDirectorandchieftechnologyoficerofthe

Company.HewasapointedasaDirectoronAugust15,2019andwasredesignatedasan

executiveDirectoronFebruary19,2025,whichwilcomeintoefectupontheListing.

Mr.Gaohasovertenyears’experienceintechnologyresearchandevelopmentand

industrializationofsemiconductormaterials.HesucesivelyworkedasaR&Denginer,headof

R&Dcenter,directorandheadofR&DcenterofSICMaterialsCo.,Ltd.(山东天岳先进材料科

技有限公司),ourpredecesor,fromJuly2014toNovember2020.Mr.Gaohaservedasa

DirectorandchieftechnologyoficeroftheCompanysinceNovember2020.

Mr.Gaoreceivedabachelor’sdegreininorganicnon-metalicmaterialsfromShandong

UniversityofScienceandTechnology(山东科技大学)inthePRCinJune2009andadoctoral

degreinmaterialsphysicsandchemistryfromZhejiangUniversity(浙江大学)inthePRCJune

2014.Mr.GaohasbenqualifiedasaSeniorEnginerbyShandongEngineringandTechnology

PositionQualificationSeniorApraisalComite(山东省工程技术职务高级评审委员会)inMay

2018.

Mr.WangJunguo(王俊国),aged46,isanexecutiveDirectorandjointcompanysecretary

oftheCompany.HewasapointedasanDirectoronJuly2,2025andwasredesignatedasan

executiveDirectoronthevendate,whichwilcomeintoefectupontheListing.

DIRECTORS,SUPERVISORSANDSENIORMANAGEMENT

---

Mr.Wanghasextensivexperienceinfinancialmanagement.Heservedasthefinancial

directorofSICMaterialsCo.,Ltd.(山东天岳先进材料科技有限公司),ourpredecesor,from

August2016toNovember2020andhaservedasthefinancialdirectorofourCompanysince

November2020,oursecuritiesafairsrepresentativesinceAugust2024andalsourjointcompany

secretarysinceJune2025.Mr.WangcomencedhiscarerinAugust1996andhadconsecutively

workedatJinanHengshunClothingCo.,Ltd.(济南恒舜制衣有限公司),JinanYikeMetalProducts

Co.,Ltd.(济南伊科金属制品有限公司)andShandongJiutiangongAs-hideGelatinProductsCo.,

Ltd.(山东九天贡阿胶制品有限公司),beforejoiningourGroup.

Mr.WangraduatedfromShandongInstituteofEconomics(山东经济学院)(curentlyknown

asShandongUniversityofFinanceandEconomics(山东财经大学)inShandongProvince,the

PRC,withamajorinacounting,inDecember2001,vialongdistancelearning,andgraduated

fromChinaUniversityofPetroleum(EastChina)(中国石油大学(华东)inShandongProvince,the

PRC,withamajorinacountinginJanuary2019,viaonlinelearning.Mr.Wanghasben

qualifiedasanIntermediateAcountant(中级会计师)bytheMinistryofFinanceofthePRC(中

华人民共和国财政部)inSeptember2003.

Non-executiveDirectors

Mr.QiuYufeng(邱宇峰),aged65,wasapointedasaDirectoronFebruary29,2024and

wasre-designatedasanon-executiveDirectoronFebruary19,2025,whichwilcomeintoefect

upontheListing.Mr.QiuservedasanindependentDirectorofourCompanyfromNovember2020

toJanuary2021.

Mr.Qiuhasmorethan30years’experienceinelectricityandsemiconductortechnology

researchandevelopment.Heconsecutivelyservedastheheadofrelayprotectionoficeand

deputydirectorathePowerSystemResearchInstituteofChinaElectricPowerResearchInstitute

(中国电力科学研究院电力系统研究所)fromJune1994toNovember1999,amanagingdeputy

directoratheNationalEngineringResearchCenterforPowerTransmisionandDistributionand

PowerSavingTechnologyofChinaElectricPowerResearchInstitute(中国电力科学研究院输配电

及节电技术国家工程研究中心)fromNovember1999toDecember2006,avicepresidentatChina

ElectricPowerResearchInstitute(中国电力科学研究院)fromDecember2006toFebruary2012.

Mr.Qiusucesivelyservedasvariouspositions,includingavicepresident,president,consultant

andotherpositionsatGlobalEnergyInternetResearchInstituteCo.,Ltd.(全球能源互联网研究院

有限公司,formerlyknownasGuowangInteligencePowerGridResearchInstitute(国网智能电网

研究院)fromFebruary2012toFebruary2020.Mr.Qiucurentlyservesasachairprofesorat

XiamenUniversity(厦门大学),andhaservedasthechairmanoftheboardandgeneralmanager

ofBoceRuichuangSemiconductorTechnology(Suzhou)Co.,Ltd.(博测锐创半导体科技(苏州)有

限公司)sinceApril2022,anexecutivedirectorandthegeneralmanagerofBeijingBoce

SemiconductorTechnologyCo.,Ltd.(北京博测半导体科技有限公司)sinceMay2022,an

DIRECTORS,SUPERVISORSANDSENIORMANAGEMENT

---

independentdirectorofSieyuanElectricCo.,Ltd.(思源电气股份有限公司),acompanylistedon

theShenzhenStockExchange(stockcode:002028),sinceJune2023andthexecutivepartnerof

BeijingShundeshengEnterpriseManagementPartnership(LimitedPartnership)(北京顺德盛企业

管理合伙企业(有限合伙)sinceSeptember2023.Mr.Qiuwasnotinvolvedinthedaily

managementandoperationofourCompanyandtheabovementionedcompanies.Asuch,the

directorshipsheldbyMr.QiuwouldnotgiverisetoanymaterialcompetitionisueunderRule

8.10(2)oftheHongKongListingRules.

Mr.QiuisafelowoftheChineseSocietyofElectricalEnginering(中国电机工程学会).He

obtainedtheChinaElectricPowerScienceandTechnologyOutstandingContributionAward(中国

电力科学技术杰出贡献奖)byChineseSocietyofElectricalEnginering(中国电机工程学会)in

October2018andwasacreditedasaCapitalScienceandTechnologyCeremonyPersonality(首

都科技盛典人物)byBeijingScienceandTechnologyColaborationCenter(北京科技协作中心)in

December2018.

Mr.Qiureceivedabachelor’sdegreinpowersystemrelayprotectionandautomationfrom

NorthChinaElectricPowerInstitute(华北电力学院)(curentlyknownasNorthChinaElectric

PowerUniversity(华北电力大学)inthePRCinAugust1982andamaster’sdegreofbusines

administrationfromChinaEuropeInternationalBusinesSchol(CEIBS)(中欧国际工商学院)in

thePRCinOctober2003.Mr.QiuhasbenqualifiedasaResearcher-levelSeniorEnginer(正研

级高级工程师)byReviewComiteforSeniorEnginer(ImprovementofTreatment)of

ScientificResearchUnitsinBeijingofMinistryofElectricPowerIndustry(电力工业部京内科研

单位高工(提高待遇)评审委员会)inNovember2003.

Ms.LiWanyue(李婉越),aged54,wasapointedasaDirectoronFebruary19,2025and

wasredesignatedasanon-executiveDirectoronthevendate,whichwilcomeintoefectupon

theListing.

Ms.Lihas30years’experienceinacountingandfinancing.SheworkedatBeijingNew

BuildingMaterialsGeneralFactory(北京新型建筑材料总厂)fromJuly1994toJuly1999,where

herlastpositionwasanasistantacountant.DuringOctober1999toDecember2020,Ms.Li

servedasvariouspositionsatBeijingNewBuildingMaterials(Group)Limited(北新建材(集团)有

限公司),includinganacountantofthefinancedepartment,themanagerofthefinancedepartment

andotherpositions.ShehaservedasthechiefacountantofChinaBuildingMaterialsJoint

InvestmentCo.,Ltd.(中建材联合投资有限公司)sinceDecember2022.

DIRECTORS,SUPERVISORSANDSENIORMANAGEMENT

---

Ms.Lireceivedabachelor’sdegreinruraleconomicmanagementfromBeijingUniversity

ofAgriculture(北京农学院)inthePRCinJuly1994,andamaster’sdegreinacountingfrom

RenminUniversityofChina(中国人民大学)inthePRCinJune2005.Ms.Lihasbenqualified

asaSeniorAcountant(高级会计师)byChinaConstructionMaterialsGroupCorporation(中国建

筑材料集团公司)(curentlyknownasChinaNationalBuildingMaterialCo.,Ltd.(中国建材集团

有限公司)inDecember2005.

Mr.FangWei(方伟),aged50,wasapointedasaDirectoronFebruary29,2024andwas

re-designatedasanon-executiveDirectoronFebruary19,2025,whichwilcomeintoefectupon

theListing.

Mr.Fanghasmorethan25years’experienceinwirelesproductengineringandcorporate

management.SinceFebruary1999,hehasworkedataglobalenterprisengagedinprovisionof

informationandcomunicationstechnology(ICT)infrastructureandsmartdevices.Hehasalso

servedasadirectorofSuzhouOrientalSemiconductorCompanyLimited(苏州东微半导体股份有

限公司),acompanylistedontheShanghaiStockExchange(stockcode:688261),sinceDecember

2023.

Mr.Fangreceivedabachelor’sdegreincomunicationsengineringinJuly1996anda

master’sdegreincomunicationandinformationsysteminMarch1999fromShanghaiJiaoTong

University(上海交通大学)inthePRC.

IndependentNon-executiveDirectors

Mr.LiHonghui(李洪辉),aged61,wasapointedasanindependentDirectoronFebruary

29,2024andwasre-designatedasanindependentnon-executiveDirectoronFebruary19,2025,

whichwilcomeintoefectupontheListing.

Mr.Lihasextensivexperienceinfinancialmanagement.HeworkedatheMinistryof

FinanceofthePeople’sRepublicofChina(中华人民共和国财政部)untilAugust2014andhislast

positionwasdeputydirectorofinvestmentapraisalcenter.HealsoworkedasadirectorofChina

CindaAsetManagementCo.,Ltd.(中国信达资产管理股份有限公司),acompanylistedonthe

HongKongStockExchange(stockcode:1359),fromAugust2014toJuly2018.Mr.Liservedas

thedeputydirectorofthebudgetapraisalcenteroftheMinistryofFinanceofthePeople’s

RepublicofChina(中华人民共和国财政部)in2018.HealsoservedasthechairmanofChina

OverseasTechnologyDevelopmentCo.,Ltd.(中海外科技开发有限公司)untilNovember2019.He

servedasanexecutivedirectorofBeijingZhongcaiBaoxinManagementConsultingCo.,Ltd.(北

京中财宝信管理咨询有限公司)fromJune2022toJanuary2024.Mr.Lihaservedasan

executivedirector,generalmanagerandfinancialdirectorofZhongrunHuiming(Hainan)

InvestmentCo.,Ltd.(中润辉铭(海南)投资有限公司)sinceJune2023,asanexecutivedirector,

DIRECTORS,SUPERVISORSANDSENIORMANAGEMENT

---

generalmanagerandfinancialdirectorofHuadaZhuoyue(Beijing)InvestmentManagementCo.,

Ltd.(华大卓越(北京)投资管理有限公司)(formerlyknownasBeijingBaijiaXinchengInvestment

ManagementCo.,Ltd.(北京百家信诚投资管理有限公司)sinceOctober2023,asgeneralmanager

ofJilinNorthPharmaceuticalTechnologyCo.,Ltd.(吉林省北药科技有限公司)sinceAugust2024

andasasupervisorofLiaoningBeiyaoJinjiTechnologyDevelopmentCo.,Ltd.(辽宁北药金吉科

技发展有限公司)sinceOctober2024.

Mr.LireceivedadoctoraldegreinacountingfromtheChineseAcademyofFiscalSciences

(中国财政科学研究院)oftheMinistryofFinanceofthePRCinAugust1998.Mr.Lihasben

qualifiedasaSeniorEconomist(高级经济师)bytheMinistryofFinanceofthePeople’sRepublic

ofChina(中华人民共和国财政部)inJanuary2015.

Ms.LiuHua(刘华),aged56,wasapointedasanindependentDirectoronFebruary29,

2024andwasre-designatedasanindependentnon-executiveDirectoronFebruary19,2025,which

wilcomeintoefectupontheListing.

Ms.Liuhasextensivexperienceinlegal,regulatoryandcompliancegovernance.She

workedatShandongSanlianGroupCo.,Ltd.(山东三联集团有限责任公司)fromJuly1992to

March2002.Ms.LiuservedasalawyerofShandongKangqiaoLawFrim(康桥律师事务所)and

BeijingTianchiJuntaiLawFirm(北京天驰君泰律师事务所)fromJuly2002toFebruary2007and

fromFebruary2007toJuly2008,respectively.ShealsoservedaspartnerandlawyeratShandong

SenxinLawFirm(山东森信律师事务所)fromAugust2008toOctober2019.SinceNovember

2019,Ms.LiuhaservedaspartnerandlawyeratBeijingTianchiJuntai(Jinan)LawFirm(北京

天驰君泰(济南)律师事务所).

Ms.Liureceivedabachelor’sdegreinbiochemistryfromShandongUniversity(山东大学)

inthePRCinJuly1992.Ms.LiuhasbenqualifiedasanIntermediateEconomist(Labor)(中级经

济师(劳动)bytheMinistryofPersonelofthePeople’sRepublicofChina(中华人民共和国人事

部)inNovember1997andaPracticingLawyer(执业律师)byShandongProvincialDepartmentof

Justice(山东省司法厅)inNovember2019.

Mr.LaiKwokHungAlex(黎国鸿),aged61,wasapointedasanindependentDirectoron

February19,2025andwasredesignatedasanindependentnon-executiveDirectorontheven

date,whichwilcomeintoefectupontheListing.

Mr.Laihasextensivexperienceincorporategovernanceandfinancialadvisoryand

management.Hesucesivelyworkedastafacountant,senioracountantandmanagerof

DeloiteToucheTohmatsufromJuly1989toAugust1996.Mr.LaiworkedatAsiaComercial

HoldingsLimited,acompanylistedontheHongKongStockExchange(stockcode:0104),from

April1997toDecember2006,withislastpositionasthecompanysecretaryandfinancial

DIRECTORS,SUPERVISORSANDSENIORMANAGEMENT

---

controler.FromJanuary2007toApril2013,Mr.Laisucesivelyservedasthefinancial

controleratITCPropertiesGroupLimited,acompanylistedontheHongKongStockExchange

(stockcode:0199),andaschiefinancialoficerandcompanysecretaryatITCorporation

Limited,acompanylistedontheHongKongStockExchange(stockcode:0372).SinceAugust

2013,Mr.Laihaservedasexecutivedirectorandthememberoftheinvestmentcomiteofthe

boardofdirectorsofGeminiInvestments(Holdings)Limited,acompanylistedontheHongKong

StockExchange(stockcode:0174),andhasbenconcurentlyapointedaschiefexecutiveoficer

sinceDecember2020.Hehasalsoservedasindependentnon-executivedirectorofSGroup

HoldingsLimited(桦欣控股有限公司),acompanylistedontheHongKongStockExchange

(stockcode:1657),sinceFebruary2017.

Mr.LaihasbenamemberofUrbanLandInstitute,TheAmericanChamberofComercein

HongKongandTheHongKongInstituteofDirectorsinceMay2017,October2017and

November2018,respectively.HealsohasbenafelowmemberofTheAsociationofChartered

CertifiedAcountantsandHongKongSocietyofAcountantsinceSeptember2000and

December2002,respectively.Mr.LaihasbenamemberofTheHongKongInstituteofCompany

SecretariesinceDecember2001.

Mr.LaireceivedabachelorofartsdegreinacountancyfromTheCityUniversityofHong

KonginHongKonginNovember1993andadiplomainlawfromTheUniversityofHongKong

inHongKonginJuly2002.Healsobtainedamaster’sdegreinprofesionalacountingfrom

TheHongKongPolytechnicUniversityinHongKonginNovember2004,whichwascompleted

partlythroughlong-distancelearning.

SUPERVISORYCOMITE

OurSupervisoryComitecomprisesofthremembers.OurSupervisorserveatermof

threyearsandmaybere-electedforsucesivereapointments.Thefunctionsandutiesofthe

SupervisoryComiteincludereviewingfinancialreports,businesreportsandprofitdistribution

planspreparedbytheBoardandoverseingthefinancialandbusinesperformanceofourGroup.

Theyarealsoentitledtoapointcertifiedpublicacountantsandpracticingauditorstore-examine

ourCompany’sfinancialinformationwherenecesary.

DIRECTORS,SUPERVISORSANDSENIORMANAGEMENT

---

ThefolowingtablesetsoutinformationinrespectofourSupervisors:

NameAgePosition/Title

DateofFirst

Apointmentas

aSupervisor

TimeofJoining

ourGroupRolesandResponsibilities

Relationshipwith

Directors,

Supervisorsand

Seniormanagement

Ms.Zhang

Hongyan

(张红岩)

.

38Chairmanofour

SupervisoryComite

November7,

April20,2012Responsibleforoveral

workofourSupervisory

Comiteand

supervisingthe

performanceofdutiesby

ourDirectorsandour

seniormanagement

None

Mr.SongJian

(宋建)

.

38SupervisorNovember7,

August17,

Responsiblefor

supervisingthe

performanceofdutiesby

ourDirectorsandour

seniormanagement

None

Mr.DouWentao

(窦文涛)

.

42SupervisorAugust22,

November3,

Responsiblefor

supervisingthe

performanceofdutiesby

ourDirectorsandour

seniormanagement

None

Supervisors

Ms.ZhangHongyan(张红岩),aged38,wasapointedasourSupervisorandthechairman

ofourSupervisoryComiteonNovember7,2020.

Ms.Zhanghasextensivexperienceintechnicalenginering.Shesucesivelyworkedasa

technicianinthequalitydepartment,headoftechnologycenter,salestechnicalsuporterand

managerofthequalitydepartmentofSICMaterialsCo.,Ltd.(山东天岳先进材料科技有限公司),

ourpredecesor,fromApril2012toNovember2020.SinceNovember2020,shehaservedasthe

headofthequalitydepartmentandaSupervisoroftheCompany.

DIRECTORS,SUPERVISORSANDSENIORMANAGEMENT

---

Ms.Zhangreceivedabachelor’sdegreandmaster’sdegreinmaterialscienceand

engineringfromUniversityofJinan(济南大学)inthePRCinJune2010andJune2012,

respectively.Ms.ZhanghasbenqualifiedasaSeniorEnginer(高级工程师)byJinan

EngineringandTechnologyPositionQualificationSeniorApraisalComite(济南市工程技术

职务高级评审委员会)inJanuary2021.

Mr.SongJian(宋建),aged38,wasapointedasourSupervisoronNovember7,2020.

Mr.SonghasextensivexperienceinSiCresearchandevelopment.Hesucesivelyworked

asatechnicianandheadintheSiCbusinesunit,headofthetechnologycenterandmanagerof

thequipmentandpowerdepartmentofSICMaterialsCo.,Ltd.(山东天岳先进材料科技有限公

司),ourpredecesor,fromAugust2011toNovember2020.SinceNovember2020,hehaserved

astheheadofthengineringdepartmentandaSupervisoroftheCompany.

Mr.Songreceivedabachelor’sdegreinprocesequipmentandcontrolengineringfrom

QingdaoUniversityofScienceandTechnology(青岛科技大学)inthePRCinJuly2010.Mr.Song

hasbenqualifiedasaSeniorEnginer(高级工程师)byJinanEngineringandTechnology

PositionQualificationSeniorApraisalComite(济南市工程技术职务高级评审委员会)in

January2021.

Mr.DouWentao(窦文涛),aged42,wasapointedasourSupervisoronAugust22,2024.

Mr.Douhasextensivexperienceinprojectmanagementandcorporategovernance.Mr.Dou

sucesivelyservedasaprojectmanager,managerofsalesdepartment,actingexecutivedirector

andasistantothechairmanoftheBoardofSICMaterialsCo.,Ltd.(山东天岳先进材料科技有

限公司),ourpredecesor,fromOctober2010toNovember2020.SinceNovember2020,hehas

servedastheasistantothechairmanoftheBoardatheCompany.

Mr.Doureceivedabachelor’sdegreinopticalinformationscienceandtechnologyfrom

HuazhongUniversityofScienceandTechnology(华中科技大学)inthePRCinJune2007and

master’sdegreinthefieldofengineringinelectronicsandcomunicationengineringfrom

Xi’anUniversityofElectronicScienceandTechnology(西安电子科技大学)inthePRCinJune

2020.Mr.DouhasbenqualifiedasaSeniorEnginer(高级工程师)byJinanEngineringand

TechnologyPositionQualificationSeniorApraisalComite(济南市工程技术职务高级评审委

员会)inJanuary2020.

DIRECTORS,SUPERVISORSANDSENIORMANAGEMENT

---

SENIORMANAGEMENT

Thefolowingtablesetsoutinformationregardingthemembersofseniormanagementofour

Company:

NameAgePosition/Title

DateofFirst

Apointmentas

Senior

Management

DateofJoining

ourGroupRoleandResponsibility

Relationshipwith

Directors,

Supervisorsand

Seniormanagement

Mr.ZongYanmin

(宗艳民)

.

61ChairmanoftheBoard,

executiveDirectorand

generalmanager

November2,

November2,

Responsiblefor

formulatingtheoveral

developmentstrategies,

businesdevelopment

andmanagementofour

Group

None

Mr.GaoChao

(高超)

.

38ExecutiveDirectorand

chieftechnologyoficer

November7,

July1,2014Responsibleforoverseing

theR&Dstrategy

management,project

developmentand

managementofour

Group

None

Mr.Zhong

Wenqing

(钟文庆)

.

57SecretarytotheBoardDecember1,

December1,

ResponsibleforBoard

relatedmaters,

informationdisclosure

andinvestorelations

management,and

corporategovernanceof

theGroup

None

Ms.YouYing

(游樱)

.

50ChiefinancialoficerSeptember29,

April1,2024Responsiblefortheoveral

financialstrategy,

acountingandtreasury

relatedmanagementof

theGroup

None

Mr.ZongYanmin(宗艳民),aged61,isthechairmanoftheBoard,executiveDirectorand

generalmanageroftheCompany.Se“—BoardofDirectors—ExecutiveDirectors”forhis

biographicaldetails.

DIRECTORS,SUPERVISORSANDSENIORMANAGEMENT

---

Mr.GaoChao(高超),aged38,isanexecutiveDirectorandchieftechnologyoficerofthe

Company.Se“—BoardofDirectors—ExecutiveDirectors”forherbiographicaldetails.

Mr.ZhongWenqing(钟文庆),aged57,haservedasthesecretarytotheBoardofthe

CompanysinceAugust2022.Mr.ZhongjoinedourGroupinDecember2018andsucesively

servedasthechiefinancialoficeroftheCompanyfromDecember2018toAugust2019,

DirectorandchiefinancialoficerfromAugust2019toApril2023,andDirectorfromApril2023

toFebruary2024.Mr.Zhongalsocurentlyservesasdirectorand/orsupervisorinseveral

subsidiariesofourCompany.

Mr.Zhonghasmorethan25years’experienceinacountingandfinancemanagement,capital

marketsandcorporategovernance.PriortojoiningourGroup,heworkedasthefinancialmanager

atPilsburyGreaterChinaRegionofGeneralMils(China)InvestmentCo.,Ltd.(通用磨坊(中

国)投资有限公司)fromJanuary1998toFebruary1999.DuringhiscareratXeroxChinaCo.,

Ltd.(美国施乐中国有限公司),Mr.Zhongservedasthefinancialdirectorandmarketingdirector.

HethenservedasthefinancialanalysiseniormanagerofSimensIndustrySoftware(Shanghai)

Co.,Ltd(西门子工业软件(上海)有限公司)fromDecember2003toApril2005.Mr.Zhongjoined

VolvoConstructionEquipment(China)Co.,Ltd.inJune2005andservedasthechiefinancial

oficeroftheChinaRegionofVolvoConstructionEquipment.Mr.Zhongservedasthepresident

ofRnomacInternationalLimitedfromJanuary2011toNovember2018.

Mr.Zhongreceivedabachelor’sdegreinjournalismfromFudanUniversity(复旦大学)in

thePRCinJuly1991andamaster’sdegrefromUniversityofHoustonintheUnitedStatesin

August1996.Mr.ZhongobtainedtheQualificationofSecretaryoftheBoardofDirectorsof

STARMarket(科创板董事会秘书资格),grantedbytheShanghaiStockExchangeinAugust2022.

Ms.YouYing(游樱),aged50,haservedasthechiefinancialoficeroftheCompanysince

September2024.Ms.YoujoinedtheGroupinApril2024andhaservedasthefinancedirectorof

ShanghaiTianyuesincethen.

Ms.Youhasover25years’experienceinacountingandfinancemanagement.Priorto

joiningourGroup,sheworkedasanauditmanagerofShandongQianjuLimitedLiability

AcountingFirm(山东干聚有限责任会计师事务所)fromJuly1998toDecember2004.Ms.You

servedastheseniorfinancemanagerofSAICGeneralMotorsDongyueCo.,Ltd.(上汽通用东岳

汽车有限公司)fromDecember2004toMarch2024.

Ms.Youreceivedabachelor’sdegreinacountingfromQingdaoUniversity(青岛大学)in

thePRCinJuly1998andamaster’sdegreinlaboreconomicsfromOceanUniversityofChina

(中国海洋大学)inthePRCinSeptember2005.ShehasbenqualifiedasaCertifiedTaxAgents

(注册税务师)byShandongProvincialPersonelDepartment(山东省人事厅)(curentlyknownas

DIRECTORS,SUPERVISORSANDSENIORMANAGEMENT

---

ShandongProvinceHumanResourcesandSocialSecurityDepartment(山东省人力资源与社会保

障厅)inJune2001,CertifiedInternalAuditor(国际注册内部审计师)byInstituteofInternal

Audit(国际审计师协会)inNovember2008,CertifiedPublicAcountant(注册会计师)byChinese

InstituteofCertifiedPublicAcountants(中国注册会计师协会)inMay2015andSenior

Acountant(正高级会计师)byShandongProvinceAcountingProfesionalQualificationSenior

ApraisalComite(山东省会计专业资格高级评审委员会)inOctober2021.

JOINTCOMPANYSECRETARIES

Mr.WangJunguo(王俊国),aged46,isanexecutiveDirectorandourjointcompany

secretary.Se“—BoardofDirectors—ExecutiveDirectors”forhisbiographicaldetails.

Ms.LeungSauFong(梁秀芳)hasbenapointedasourjointcompanysecretary.

Ms.LeunghavesubstantialexperienceinliaisingwiththeHongKongStockExchange,

financialadviser,lawyersandindependentnon-executivedirectors.Ms.Leungcurentlyservesas

thecompanysecretaryofseveralcompanieslistedontheMainBoardandGEMBoardoftheHong

KongStockExchange,includingDatronixHoldingsLimited(stockcode:0889)andUnity

EnterpriseHoldingsLimited(stockcode:2195)andSlingGroupHoldingsLimited(stockcode:

8285).

Ms.Leungreceivedabachelor’sdegreinlawsfromUniversityofLondoninUnited

KingdomthroughdistancelearningcoursesinAugust2000.Shealsobtainedadiplomain

ChineseprofesionalawsjointlyoferedbyChineseUniversityofPoliticalScienceandLaw(中

国政法大学)inthePRCandBolinInstituteinHongKonginNovember1996.Ms.Leunghasben

qualifiedasaCharteredSecretary(特许秘书)byTheHongKongCharteredGovernanceInstitute

(香港公司治理公会)andTheCharteredGovernanceInstitute(特许公司治理公会)inMarch1996.

BOARDCOMITES

OurBoardelegatescertainresponsibilitiestovariouscomites.Inacordancewiththe

relevantPRClawsandregulationsandtheCorporateGovernanceCodeasetoutinApendixC1

totheHongKongListingRules,ourCompanyhasformedfourBoardcomites,namelythe

StrategyComite,theAuditComite,theNominationComiteandtheRemunerationand

ApraisalComite.

DIRECTORS,SUPERVISORSANDSENIORMANAGEMENT

---

StrategyComite

WehavestablishedaStrategyComiteinordertomonitorthestrategyandbusinesplans

oftheCompany.TheStrategyComiteconsistsofthreDirectors,namelyMr.ZongYanmin,

Mr.QiuYufengandMr.LiHonghui.Mr.ZongYanminservesasthechairpersonoftheStrategy

Comite.TheprimarydutiesoftheStrategyComitearetoreviewthexecutionoflong-term

businesplansandperformancetargetsoftheGroup,andtoadviseonoperationalstrategies,major

financingplans,investmentproposalsandothermajorstrategicisuesoftheCompany.

AuditComite

WehavestablishedanAuditComitewithwritentermsofreferenceincompliancewith,

amongothers,Rule3.21oftheHongKongListingRulesandparagraphD.3ofpart2ofthe

CorporateGovernanceCodeasetoutinApendixC1totheHongKongListingRules.TheAudit

ComiteconsistsofthreDirectors,namelyMr.LiHonghui,Mr.LaiKwokHungAlexandMs.

LiuHua.Mr.LiHonghuiservesasthechairpersonoftheAuditComite.Mr.LaiKwokHung

Alex,beingamemberoftheAuditComite,holdstheapropriateprofesionalqualificationsas

requiredunderRules3.10(2)and3.21oftheHongKongListingRules.Theprimarydutiesofthe

AuditComiteinclude,butnotlimitedto,thefolowing:

(cid:129)monitoring,reviewingandevaluatingtheworkofexternalauditors;

(cid:129)monitoringandmakingrecomendationstointernalauditworkofourCompany;

(cid:129)reviewingandmakingrecomendationstothefinancialreportsofourCompany;

(cid:129)evaluatingthefectivenesofinternalcontrolwork;

(cid:129)ensuringcordinationbetwenthemanagement,internalauditdepartmentandrelevant

departmentsandexternalauditors;

(cid:129)performingthecorporategovernanceproceduresofourCompany;and

(cid:129)performingotherdutiesandresponsibilitiesasasignedbyourBoard.

NominationComite

WehavestablishedaNominationComitewithwritentermsofreferenceincompliance

with,amongothers,paragraphB.3ofpart2oftheCorporateGovernanceCodeasetoutin

ApendixC1totheHongKongListingRules.TheNominationComiteconsistsofthre

DIRECTORS,SUPERVISORSANDSENIORMANAGEMENT

---

Directors,namelyMs.LiuHua,Mr.ZongYanminandMr.LaiKwokHungAlex.Ms.LiuHua

servesasthechairpersonoftheNominationComite.TheprimarydutiesoftheNomination

Comiteinclude,butnotlimitedto,thefolowing:

(cid:129)reviewingandmakingrecomendationstotheBoardonthecompositionandnumberof

ourBoardandseniormanagementwithreferencetourCompany’sbusinesactivities,

thescaleofasetsandshareholdingstructure;

(cid:129)identifyingindividualsuitablyqualifiedtobecomeamemberofourBoardandsenior

managementandmakingrecomendationstourBoardontheselectionofindividuals

nominatedfordirectorshipsandseniormanagement;

(cid:129)reviewingthestructureandiversityoftheBoardandselectingindividualstobe

nominatedasDirectors;

(cid:129)acesingandmakingrecomendationstotheselectionofotherseniormanagement

apointedbyourBoard;

(cid:129)performingotherdutiesandresponsibilitiesasasignedbyourBoard;

(cid:129)evaluatingtheperformanceofdirectors,generalmanagersandotherseniormanagement;

(cid:129)evaluatingtheindependenceofindependentnon-executivedirectors;and

(cid:129)formulatingpoliciesrelatedtothediversityofboardmembersandisclosesuchpolicies

orpolicysumariesinthecorporategovernancereport.

RemunerationandApraisalComite

WehavestablishedaRemunerationandApraisalComitewithwritentermsof

referenceincompliancewith,amongothers,paragraphE.1ofpart2oftheCorporateGovernance

CodeasetoutinApendixC1totheHongKongListingRules.TheRemunerationandApraisal

ComiteconsistsofthreDirectors,namelyMr.LaiKwokHungAlex,Mr.ZongYanminand

Ms.LiuHua.Mr.LaiKwokHungAlexservesasthechairpersonoftheRemunerationand

ApraisalComite.TheprimarydutiesoftheRemunerationandApraisalComiteinclude,

butnotlimitedto,thefolowing:

(cid:129)reviewingandaprovingremunerationproposalsofmembersofourseniormanagement

inacordancewithourCompany’spoliciesandobjectivesasaprovedbyourBoard

fromtimetotime;

DIRECTORS,SUPERVISORSANDSENIORMANAGEMENT

---

(cid:129)makingrecomendationstourBoardonourCompany’spolicyandstructureforal

Directors’andseniormanagementremunerationandonthestablishmentofaformal

andtransparentprocedurefordevelopingremunerationpolicy,includingbutnotlimited

to,performancevaluationstandards,proceduresandevaluationsystems;

(cid:129)conductingthevaluationoftheanualperformanceofalDirectorsandsenior

management;

(cid:129)monitoringcompensationpayabletoalDirectorsandseniormanagement;

(cid:129)makingrecomendationstotheBoardontheremunerationofnon-executivedirectors;

(cid:129)ensuringthatnodirectororanyofhis/hercontactsisinvolvedindetermininghis/her

ownremuneration;

(cid:129)monitoringtheimplementationofourCompany’sremuneration;

(cid:129)reviewingand/oraprovingmatersrelatingtoshareschemesunderChapter17ofthe

HongKongListingRules;and

(cid:129)performingotherdutiesandresponsibilitiesasasignedbyourBoard.

CONFIRMATIONFROMOURDIRECTORS

Rule8.10(2)oftheHongKongListingRules

Saveascertainon-executivedirectorshipsheldbyMr.QiuYufeng,ournon-executive

Director,asdisclosedabove,noneofourDirectors,asoftheLatestPracticableDate,interestedin

abusineswhichcompetesorislikelytocompete,eitherdirectlyorindirectly,withour

Company’sbusineswhichwouldrequiredisclosureunderRule8.10(2)oftheHongKongListing

Rules.

Rule3.09DoftheHongKongListingRules

EachofourDirectorsconfirmsthatheorshe(i)hasobtainedthelegaladvicereferedto

underRule3.09DoftheHongKongListingRulesonFebruary19,2025,and(i)understandsthe

requirementsundertheHongKongListingRulesthatareaplicabletohimorherasadirectorof

alistedisuerundertheHongKongListingRulesandtheposibleconsequencesofmakingafalse

declarationorgivingfalseinformationtotheHongKongStockExchange.

DIRECTORS,SUPERVISORSANDSENIORMANAGEMENT

---

Rule3.13oftheHongKongListingRules

Eachoftheindependentnon-executiveDirectorshasconfirmed(i)his/herindependenceas

regardseachofthefactorsreferedtoinRules3.13(1)to(8)oftheHongKongListingRules,(i)

he/shehasnopastorpresentfinancialorotherinterestinthebusinesoftheCompanyorits

subsidiariesoranyconectionwithanycoreconectedpersonoftheCompanyundertheHong

KongListingRulesasoftheLatestPracticableDate,and(i)thatherearenotherfactorsthat

mayafecthis/herindependenceathetimeofhis/herapointments.

COMPENSATIONOFDIRECTORS,SUPERVISORSANDSENIORMANAGEMENT

WeoferourexecutiveDirectors,Supervisorsandseniormanagementmembers,whoarealso

theCompany’semployes,compensationintheformofsalaries,retirementbenefitscheme

contributions,discretionarybonus,housingprovidentfund,socialinsuranceandotherbenefitsin

kind.Ourindependentnon-executiveDirectorsreceivecompensationwithreferencetotheir

respectivepositionsanduties,includingbeingamemberorthechairmanofBoardcomites.

FortheyearsendedDecember31,2022,2023and2024andthethremonthsendedMarch

31,2025,theagregateamountofremunerationpaidorpayable,includingshare-based

compensation,tourDirectorsandSupervisorsamountedtoaproximatelyRMB11.0milion,

RMB8.9milion,RMB9.0milionandRMB1.9milion,respectively.

Underthearangementcurentlyinforce,westimatethetotalcompensationbeforetaxation,

includingestimated-sharebasedcompensation,tobeacruedtourDirectorsandourSupervisors

fortheyearendingDecember31,2025tobeaproximatelyRMB10.0milion.Theactual

remunerationofDirectorsandSupervisorsin2025maybediferentfromthexpected

remuneration.

ThefiveindividualswhosemolumentswerethehighestintheGroupincludethre,two,two

andoneDirector(s)fortheyearsendedDecember31,2022,2023and2024andthethremonths

endedMarch31,2025,respectively.Thetotalemolumentsfortheremainingnon-director

individualsamongthefivehighestpaidindividualsamountedtoaproximatelyRMB4.2milion,

RMB7.7milion,RMB7.8milionandRMB2.0milionfortheyearsendedDecember31,2022,

2023and2024andthethremonthsendedMarch31,2025,respectively.Furtherdetailsonthe

remunerationofthefiveindividualswhosemolumentswerethehighestintheGroupduringthe

TrackRecordPeriodaresetoutintheAcountant’sReportinApendixItothisprospectus.

DuringtheTrackRecordPeriod,noconsiderationwaspaidbyourCompanyto,oreceivable

by,ourDirectorsformakingavailabledirectors’servicesorasterminationbenefits.Noneofthe

DirectorsorSupervisorswaivedtheiremunerationduringtherelevantperiod.

DIRECTORS,SUPERVISORSANDSENIORMANAGEMENT

---

TheremunerationofourDirectors,Supervisorsandseniormanagementisdeterminedwith

referencetofactorsincludingbutnotlimitedtotheresponsibility,riskandcomitmentofour

Directors,Supervisorsandseniormanagement,theperformancevaluationstructureandresults

andthesalariespaidbycomparablecompanies.

Saveasdisclosedaboveandin“FinancialInformation,”“ApendixI—Acountant’s

Report”and“ApendixVI—StatutoryandGeneralInformation”,notherpaymentshaveben

paid,orarepayable,byourCompanyoranyofoursubsidiariestourDirectors,Supervisorsor

thefivehighestpaidindividualsduringtheTrackRecordPeriod.

CORPORATEGOVERNANCE

OurCompanyiscomitedtoachievinghighstandardsofcorporategovernancewithaview

tosafeguardingtheinterestsofourShareholders.Toacomplishthis,ourCompanycompliesor

intendstocomplywiththecorporategovernancerequirementsundertheCorporateGovernance

CodeasetforthinApendixC1totheHongKongListingRulesaftertheListing.

OurDirectorsrecognizetheimportanceofincorporatingelementsofgodcorporate

governanceinthemanagementstructuresandinternalcontrolproceduresofourGrouptoachieve

efectiveacountability.OurCompanyintendstocomplywithalcodeprovisionsintheCorporate

GovernanceCodeasetoutinApendixC1totheHongKongListingRulesaftertheListing

exceptforCodeProvisionC.2.1ofPart2oftheCorporateGovernanceCode,whichprovidesthat

therolesofchairmanoftheboardandchiefexecutiveoficershouldbeseparateandshouldnotbe

performedbythesameindividual.

TherolesofchairmanoftheBoardandgeneralmanagerarecurentlyperformedbyMr.

Zong.InviewofMr.Zong’substantialcontributiontourGroupsinceitsestablishmentandhis

extensivexperienceintheindustryandcorporatemanagement,weconsiderthathavingMr.Zong

actingasbothourchairmanoftheBoardandgeneralmanagerwilprovidestrongandconsistent

leadershiptourGroupandfacilitatetheficientexecutionofourbusinestrategies.We

consideritapropriateandbeneficialtourbusinesdevelopmentandprospectsthatMr.Zong

continuestoactasbothourchairmanoftheBoardandgeneralmanageraftertheListing,and

thereforecurentlydonotproposetoseparatethefunctionsofchairmanoftheBoardandchief

executiveoficeroftheCompany.

WhilethiswouldconstituteadeviationfromCodeProvisionC.2.1ofPart2oftheCorporate

GovernanceCode,theBoardbelievesthathistructurewilnotimpairthebalanceofpowerand

authoritybetwentheBoardandthemanagementofourCompany,giventhat:(i)thereare

suficientchecksandbalancesintheBoard,asadecisiontobemadebyourBoardrequires

aprovalbyatleastamajorityofourDirectors,andourBoardcomprisesthreindependent

DIRECTORS,SUPERVISORSANDSENIORMANAGEMENT

---

non-executiveDirectors,whichisincompliancewiththerequirementundertheHongKong

ListingRules;(i)Mr.ZongandtheotherDirectorsareawareofandundertaketofulfiltheir

fiduciarydutiesasDirectors,whichrequire,amongotherthings,thatheyactforthebenefitand

inthebestinterestsofourCompanyandtheShareholdersandwilmakedecisionsforourGroup

acordingly;and(i)thebalanceofpowerandauthorityisensuredbytheoperationsoftheBoard

whichcomprisesexperiencedandhighcalibreindividualswhometregularlytodiscusisues

afectingtheoperationsofourCompany.Moreover,theoveralstrategicandotherkeybusines,

financial,andoperationalpoliciesofourGrouparemadecolectivelyafterthoroughdiscusionat

bothBoardandseniormanagementlevels.TheBoardwilcontinuetoreviewthefectivenesof

thecorporategovernancestructureofourGroupinordertoaseswhetherseparationoftheroles

ofchairmanoftheBoardandchiefexecutiveoftheCompanyisnecesary.

BOARDIVERSITYPOLICY

InordertoenhancethefectivenesofourBoardandtomaintainthehighstandardof

corporategovernance,wehaveadoptedtheboardiversitypolicy(the“BoardDiversityPolicy”)

efectiveupontheListing,whichsetsoutheobjectiveandaproachtoachieveandmaintain

diversityofourBoard.Pursuantotheboardiversitypolicy,wesektoachieveBoardiversity

throughtheconsiderationofanumberofactorswhenselectingthecandidatestourBoard,

includingbutnotlimitedtogender,skils,age,profesionalexperience,knowledge,cultural,

educationbackground,ethnicityandlengthofservice.Theultimatedecisionoftheapointment

wilbebasedonmeritandthecontributionwhichtheselectedcandidateswilbringtourBoard.

OurBoardcurentlyconsistsoftwofemaleDirectorandsevenmaleDirectorswitha

balancedmixofknowledgeandskils,includingoveralmanagementandstrategicdevelopment,

electronicinformationscienceandtechnology,enginering,financeandacountingandcorporate

governanceinaditiontoindustryexperiencerelevantourGroup’soperationsandbusines.

Theyobtainedegresinvariousmajorsincludingelectronicscienceandtechnology,information

andcomputationalscience,acountingandbusinesadministration.Wehavethreindependent

non-executiveDirectorswithdiferentindustrybackgrounds,representingone-thirdofthe

membersofourBoard.Furthermore,ourBoardhasadiverseageandgenderepresentation.

Takingintoacountourexistingbusinesmodelandspecificnedsaswelasthediferent

backgroundofourDirectors,thecompositionofourBoardsatisfiesourBoardDiversityPolicy.

OurNominationComiteisresponsibleforeviewingthestructureandiversityofthe

BoardandselectingindividualstobenominatedasDirectors.AftertheListing,ourNomination

ComitewilmonitorandevaluatetheimplementationoftheBoardDiversityPolicyfromtime

totimetoensureitscontinuedefectivenes,andwhenecesary,makeanyrevisionsthatmaybe

requiredandrecomendanysuchrevisionstourBoardforconsiderationandaproval.The

DIRECTORS,SUPERVISORSANDSENIORMANAGEMENT

---

NominationComitewilalsoincludeinanualreportsthebiographicaldetailsofeachDirector

andasumaryoftheBoardDiversityPolicy,includinganymeasurableobjectivesetfor

implementingtheBoardDiversityPolicyandtheprogresonachievingtheseobjectives.

COMPLIANCEADVISOR

WehaveapointedSomerleyCapitalLimitedasourComplianceAdvisorpursuantoRules

3A.19oftheHongKongListingRules.TheComplianceAdvisorwilprovideuswithguidance

andadviceastocompliancewiththeHongKongListingRulesandotheraplicablelaws,rules,

codesandguidelines.PursuantoRule3A.23oftheHongKongListingRules,theCompliance

AdvisorwiladviseourCompanyincertaincircumstancesincluding:

(a)beforethepublicationofanyregulatoryanouncement,circularorfinancialreport;

(b)whereatransaction,whichmightbeanotifiableorconectedtransaction,is

contemplated,includingshareisuesandsharerepurchases;

(c)whereweproposetousetheprocedsoftheGlobalOferinginamanerdiferentfrom

thatdetailedinthisprospectusorwhereourbusinesactivities,developmentsoresults

deviatefromanyforecast,estimateorotherinformationinthisprospectus;and

(d)wheretheHongKongStockExchangemakesaninquirytourCompanyregarding

unusualmovementsinthepriceortradingvolumeofitslistedsecuritiesoranyother

matersinacordancewithRule13.10oftheHongKongListingRules.

TheComplianceAdvisorwil,onatimelybasis,informourCompanyofanyamendmentor

suplementotheHongKongListingRulesthatareanouncedbytheHongKongStock

Exchange.TheComplianceAdvisorwilalsoinformourCompanyofanyneworamendedlaw,

regulationorcodeinHongKongaplicabletous,andadviseusonthecontinuingrequirements

undertheHongKongListingRulesandaplicablelawsandregulations.

ThetermoftheapointmentwilcomenceontheListingDateandisexpectedtoendon

thedateonwhichourCompanycomplieswithRule13.46oftheHongKongListingRulesin

respectofourfinancialresultsforthefirstfulfinancialyearcomencingaftertheListing.

DIRECTORS,SUPERVISORSANDSENIORMANAGEMENT

---

OURCONTROLINGSHAREHOLDERS

AsoftheLatestPracticableDate,Mr.Zongwasinterestedinaproximately38.48%ofour

totalisuedsharecapital,comprising(i)aproximately30.09%ofourtotalisuedsharecapital

directlyheldbyhim,(i)aproximately5.38%ofourtotalisuedsharecapitalcontroledbyMr.

Zonginhiscapacityasthesolemanagingpartnerandgeneralpartnerofouremploye

shareholdingplatformShanghaiMaiming,and(i)aproximately3.00%ofourtotalisuedshare

capitalcontroledbyMr.Zonginhiscapacityasthesolemanagingpartnerandgeneralpartnerof

ouremployeshareholdingplatformShanghaiZhuao.Acordingly,Mr.Zong,ShanghaiMaiming

andShanghaiZhuaoconstituteagroupofControlingShareholdersbeforetheListing.Fordetails

oftherelationshipamongthegroupofourControlingShareholdersandtheirshareholdinginour

Company,sethesectionsheaded“History,DevelopmentandCorporateStructure”and

“SubstantialShareholders.”

ImediatelyfolowingthecompletionoftheGlobalOfering(asuming(i)the

Over-alotmentOptionisnotexercised,(i)nonewSharesareisuedunderour2024Restricted

ShareIncentiveSchemeand(i)notherchangesaremadetotheisuedsharecapitalofour

CompanybetwentheLatestPracticableDateandListing),Mr.Zongwilcontinuetocontrol,

directlyandindirectly(throughShanghaiMaimingandShanghaiZhuao,ouremploye

shareholdingplatformscontroledbyMr.Zong),thexerciseofaproximately34.63%voting

rightsofthenlargedisuedsharecapitalofourCompany.Therefore,Mr.Zong,Shanghai

MaimingandShanghaiZhuaowilremainasagroupofControlingShareholdersofourCompany.

NOCOMPETITIONANDCLEARDELINEATIONOFBUSINES

OurBusines

Weareacompanywithstrongexpertiseinthewidebandgapsemiconductormaterial

industry,focusingontheresearch,developmentandindustrializationofSiCsubstrates.

TheBusinesofOurControlingShareholders

ApartfromthebusinesofourCompany,Mr.Zongalsocontrolscompanieswhichengagein,

amongothers,investmentholding,sales,serviceprovision,remanufacturingandrepairingand

maintenanceofconstructionmachineryandequipment,railtransportsolutionsandfinancialease.

ShanghaiMaimingandShanghaiZhuaoserveasemployeshareholdingplatformsofourGroup

withnoactualbusinesoperations.

Inlightofabove,ourDirectorsareoftheviewthathereisacleardelineationbetwenthe

businesesoperatedbyourControlingShareholdersandourGroup.EachofourControling

Shareholdersconfirmsthat,asoftheLatestPracticableDate,theydidnothaveanyinterestina

RELATIONSHIPWITHOURCONTROLINGSHAREHOLDERS

---

busines,apartfromthebusinesofourGroup,whichcompetesorislikelytocompete,directlyor

indirectly,withourbusineswhichwouldrequiredisclosureunderRule8.10oftheHongKong

ListingRules.

NON-COMPETEUNDERTAKINGS

InconectionwiththeA-SharesListing,Mr.Zonghasprovidedanon-competeundertaking

(“Non-competeUndertaking”)tourCompanyonMay21,2021inordertoavoidpotential

competition,pursuantowhich,Mr.Zonghasundertakenthat,amongothers:

(1)asofthedateoftheNon-competeUndertaking,neitherMr.Zongnorhisother

controledenterpriseshad,inanyway,directlyorindirectlyengagedinanybusines

thatcompeteswiththebusinesoftheCompanyanditscontroledenterprises,nordid

theyholdanyshares,equityoranyotherinterestsinenterprisesthatcompetewiththe

Companyanditscontroledenterprises;

(2)foranyfuturecircumstanceswheretheproductorbusinesofMr.Zong’s

wholy-owned,controledorinterestedenterprisescompeteorislikelytocompetewith

theCompany’sbusines,Mr.Zonghasundertakento:

a)forgotheproductsorbusinesthatconstitutecompetition,and

b)uponrequestoftheCompany,disposealcapitalcontributionorequityinterestsin

suchenterprise,andgivetheCompanyapre-emptiverightoacquiresuch

investmentsorequity.Mr.Zonghasundertakentousehisbestendeavorstoensure

thathetransactionpricesaredeterminedonafairandreasonablebasisandinline

withnormalcomercialtransactionswithindependenthirdparties;

(3)ifinthefuture,anybusinesoportunitiesobtainedbyMr.Zongorotherenterprises

Mr.Zonghasinvestedincompetesorislikelytocompetewiththemainbusinesofthe

Companyanditscontroledenterprisesathatime,Mr.Zongwilpromptlynotifythe

Companyandusehisbestendeavorstoprompthathisinvestedenterprisestogivethe

Companyoritscontroledenterprisesanoptiontoacquiresuchbusinesoportunities

firstonopenandreasonableterms,therebysafeguardingtheinterestsoftheCompany

anditsShareholders;

(4)Mr.Zonghasagredto,intheventhathebreachestheaboveundertakingsandcauses

lostotheCompany,bearalcorespondinglosesuferedbytheCompany.

RELATIONSHIPWITHOURCONTROLINGSHAREHOLDERS

---

INDEPENDENCEFROMOURCONTROLINGSHAREHOLDERS

Havingconsideredthefolowingfactors,ourDirectorsaresatisfiedthatwearecapableof

caryingonourbusinesindependentlyfromourControlingShareholdersandtheirespective

closeasociatesuponListing.

ManagementIndependence

OurbusinesismanagedandoperatedbyourBoardandseniormanagement.Uponthe

Listing,ourBoardwilconsistofnineDirectors,comprisingthrexecutiveDirectors,thre

non-executiveDirectorsandthreindependentnon-executiveDirectors,andwealsohavethre

Supervisorsandfourseniormanagementmembers(ofwhichtwoarexecutiveDirectors).Eachof

ourDirectors,Supervisorsandseniormanagementposesesrelevantmanagement,financialor

industry-relatedexperiencetocontributetothemanagementofourbusines.Forfurther

informationonthequalificationsandexperienceofourDirectors,Supervisorsandsenior

management,sethesectionheaded“Directors,SupervisorsandSeniorManagement.”

Despitethat(i)Mr.Zong,ourchairmanoftheBoard,executiveDirectorandgeneral

manager,holdsdirectorshipsincertainofhiscloseasociatesandservesasthesolexecutiveand

generalpartnerofShanghaiMaimingandShanghaiZhuao,and(i)Mr.ZhongWenqing,oneof

ourseniormanagementmembers,holdsdirectorshipincertaincloseasociatesofMr.Zongandis

oneofthelimitedpartnersofeachofShanghaiMaimingandShanghaiZhuao,ourDirectorsareof

theviewthatourBoardandseniormanagementeamareabletomanageourbusines

independentlyfromtheControlingShareholdersandtheirasociatesforthefolowingreasons:

(a)neitherMr.ZongnorMr.Zhonghasparticipatedorwilparticipateinthedailybusines

operationsandmanagementofthecloseasociatesofMr.Zong.Theyareprimarily

responsibleformakingdecisionsonmatersregardingdevelopmentandcorporate

operationstrategyasmemberoftheboardofdirectorsofsuchcompanies.Shanghai

MaimingandShanghaiZhuaoserveasemployeshareholdingplatformsofourGroup

withnoactualbusinesoperations.Therefore,neitherofMr.ZongandMr.Zhong

expectsthatheirdirectorshipsinthecloseasociatesofMr.Zong(asthecasemaybe)

wiltakeupasubstantialamountoftheirtime.BothMr.ZongandMr.Zhongwilbe

abletodevotesuficientimetothemanagementofourCompany;

(b)wehaveapointedthreindependentnon-executiveDirectorstoprovideabalanceof

thenumberofpotentialyinterestedandindependentDirectorswithaviewtopromote

theinterestsoftheCompanyandourShareholdersasawhole.Theindependent

non-executiveDirectorsarentitledtoengageprofesionaladvisersatourcostfor

RELATIONSHIPWITHOURCONTROLINGSHAREHOLDERS

---

adviceonmatersrelatingtoanypotentialconflictofinterestarisingoutofany

transactiontobenteredintobetwenourCompanyandourDirectorsortheir

respectiveasociates;

(c)eachofourDirectorsisawareofhisorherfiduciarydutiesandresponsibilitiesunder

theHongKongListingRulesasadirector,whichrequirethatheorsheactsinthebest

interestsofourCompanyandourShareholdersasawhole;

(d)asanA-sharelistedcompany,ourCompanyhasestablishedinternalcontrolsystemsto

identifyandmanagepotentialconflictsofinterestbetwenourGroupandour

ControlingShareholders.AcordingtotheArticlesofAsociationofourCompany,in

theventhathereispotentialconflictofinterestarisingoutofanytransaction

betwenourCompanyandanothercompanyorentitytowhichaDirectorholdsofice,

suchDirectorshalabstainfromvotingandshalnotbecountedtowardsthequorumfor

thevoting.WhereaShareholders’metingisheldtoconsideraproposedtransactionin

whichanyoftheControlingShareholdershaveamaterialinterest,therelevant

ControlingShareholder(s)shalabstainfromvotingontheresolutionsandshalnotbe

countedtowardsthequorumforthevoting;and

(e)ourCompanyhasapointedSomerleyCapitalLimitedasourcomplianceadviser,which

wilprovideadviceandguidancetourGroupinrespectofcompliancewiththe

aplicablelawsandHongKongListingRulesincludingvariousrequirementsrelatingto

Directors’dutiesandcorporategovernance.

OperationalIndependence

OurGroupholdsaltherelevantmaterialicenses,qualificationsandpermitsrequiredfor

conductingourbusines.OurGrouphasuficientcapital,facilitiesandemployestoperateour

businesindependentlyfromtheControlingShareholdersanditscloseasociates.OurGroupalso

hasindependentacestourcustomers.Wehaveourownacountingandfinancialdepartment,

humanresourcesandadministrationdepartment,internalcontroldepartmentandtechnology

department.Inadition,wehavestablishedourinternalorganizationalandmanagementstructure

whichincludeshareholders’metings,ourBoardanditscomitesandformulatedthetermsof

referenceofthesebodiesinacordancewiththerequirementsoftheaplicablelawsand

regulations,theHongKongListingRulesandtheArticlesofAsociationofourCompany,soasto

establisharegulatedandefectivecorporategovernancestructurewithindependentdepartments,

eachwithspecificareasofresponsibilities.OurDirectorsareoftheviewthatourGroupwilbe

abletoperateindependentlyfromtheControlingShareholdersandtheirespectiveclose

asociatesaftertheListing.

RELATIONSHIPWITHOURCONTROLINGSHAREHOLDERS

---

Wenteredintocertaincontinuingconectedtransactionswithcertainasociatesofour

ControlingShareholdersinrespectofouraceptanceofpropertyleasing.Formoredetails,se

“ConectedTransactions.”Consideringthatouracestoindependentsourcesandthesuficient

competitivemarket,ourDirectorsconsiderthat,evenifsuchtransactionsareterminated,our

Companywilbeabletoidentifyothersuitablepartnersorsubstitutesthroughfairnegotiationat

similartermsandconditionsinlinewiththemarketermstometourbusinesandoperational

nedswithoutcausinganymaterialunduedelay.

Basedontheabove,ourDirectorsareoftheviewthatheCompanyoperatesindependently

fromthegroupofourControlingShareholders.

FinancialIndependence

OurGrouphasanindependentfinancialsystem.Wemakefinancialdecisionsacordingto

ourownbusinesnedsandneitherourControlingShareholdersnortheircloseasociates

intervenewithouruseofunds.Wehaveopenedacountswithbanksindependentlyandonot

shareanybankacountwithourControlingShareholdersortheircloseasociates.Wehavemade

taxfilingsandpaidtaxindependentlyfromourControlingShareholdersandtheircloseasociates

pursuantoaplicablelawsandregulations.Wehavestablishedanindependentfinance

departmentaswelasimplementedsoundandindependentaudit,acountingandfinancial

managementsystems.Wehaveadequateinternalresourcesandcreditprofiletosuportourdaily

operations.

AsoftheLatestPracticableDate,wedidnothaveanyoutstandingloansornon-trade

balancesgranted,guarantedorpledgedbyanyourControlingShareholderstous.

Basedontheabove,ourCompanyconsidersthatourbusinesisfinancialyindependentof

ourControlingShareholdersandtheircloseasociates.

CORPORATEGOVERNANCE

OurCompanyandDirectorsrecognizetheimportanceofprotectingtherightsandinterestsof

alShareholders,includingtherightsandinterestsofourminorityShareholders.

RELATIONSHIPWITHOURCONTROLINGSHAREHOLDERS

---

OurCompanywilcomplywiththeprovisionsoftheCorporateGovernanceCodein

ApendixC1totheHongKongListingRules,whichsetsoutprinciplesofgodcorporate

governance.Wehaveadoptedandwilcontinuetoadopthefolowingmeasurestoensuregod

corporategovernancestandardsandtoavoidpotentialconflictsofinterestbetwenourGroupand

ourControlingShareholders:

(a)whereaBoardmetingorShareholders’metingistobeheldforconsideringproposed

transactionsinwhichanyofourDirectorsorControlingShareholdersoranyoftheir

respectivecloseasociateshasamaterialinterest,therelevantDirectororControling

Shareholderwilabstainfromvotingontherelevantresolutions;

(b)ourCompanyhasestablishedinternalcontrolmechanismstoidentifyconected

transactions.UpontheListing,ifourCompanyentersintoconectedtransactionswith

ourControlingShareholderoranyofhisasociates,ourCompanywilcomplywiththe

aplicableListingRules;

(c)theindependentnon-executiveDirectorswilreview,onananualbasis,whetherthere

areanyconflictsofinterestsbetwentheGroupandourControlingShareholder(the

“AnualReview”)andprovideimpartialandprofesionaladvicetoprotectheinterests

ofourminorityShareholders;

(d)ourControlingShareholderwilundertaketoprovidealinformationecesary,

includingalrelevantfinancial,operationalandmarketinformationandanyother

necesaryinformationasrequiredbytheindependentnon-executiveDirectorsforthe

AnualReview;

(e)ourCompanywildisclosedecisionsonmatersreviewedbytheindependent

non-executiveDirectorseitherinitsanualreportsorbywayofanouncements(asthe

casemaybe);

(f)whereourDirectorsreasonablyrequestheadviceofindependentprofesionals,suchas

financialadvisers,theapointmentofsuchindependentprofesionalswilbemadeat

ourCompany’sexpenses;and

(g)wehaveapointedSomerleyCapitalLimitedasourcomplianceadvisortoprovide

adviceandguidancetousinrespectofcompliancewiththeaplicablelawsand

regulations,aswelastheHongKongListingRules,includingvariousrequirements

relatingtocorporategovernance.

Basedontheabove,ourDirectorsaresatisfiedthatsuficientcorporategovernancemeasures

havebenputinplacetomanageconflictsofinteresthatmayarisebetwenourGroupandour

ControlingShareholders,andtoprotectourminorityShareholders’interestsaftertheListing.

RELATIONSHIPWITHOURCONTROLINGSHAREHOLDERS

---

UponListing,certaintransactionsasetoutbelowbetwenusandourconectedpersons

wilconstitutecontinuingconectedtransactionsunderChapter14AoftheHongKongListing

Rules.

OURCONECTEDPERSONS

Wehaventeredintotransactionsintheordinaryandnormalcourseofourbusineswiththe

folowingentities,whichwilconstitutecontinuingconectedtransactions(asdefinedunder

Chapter14AoftheHongKongListingRules)uponListing:

NameofOurConectedPersonConectedRelationship

JinanTianyeEngineringMachineryCo.,Ltd.

(济南天业工程机械有限公司,“JinanTianye”)

AsoftheLatestPracticableDate,JinanTianyewas

indirectlycontroledbyMr.Zongastomore

than30%.Acordingly,JinanTianyeconstitutes

ourconectedperson(asdefinedunderChapter

14AoftheHongKongListingRules)uponthe

Listing.

JiningWeishiteInformationTechnology

DevelopmentCo.,Ltd.(济宁市纬世特信息

科技发展有限公司,“JiningWeishite”)

AsoftheLatestPracticableDate,JiningWeishite

wasindirectlycontroledasto90%byabrother

ofourDirectorandControlingShareholderMr.

Zong.Acordingly,JiningWeishiteconstitutes

ourconectedperson(asdefinedunderChapter

14AoftheHongKongListingRules)uponthe

Listing.

SUMARYOFOURCONTINUINGCONECTEDTRANSACTIONS

NatureoftransactionCounterparty

Proposed

Anualcap

Fortheyearending

December31,2025

Aplicable

ListingRulesWaiverSought

(RMBmilion)

Fulyexemptcontinuingconectedtransaction

Leaseofcertainapartmentsby

ourCompanyfromJinan

Tianye

.

JinanTianyeN/A14A.34and14A.76(1)(a)N/A

Partialyexemptcontinuingconectedtransaction

Leaseofpropertybya

wholy-ownedsubsidiaryof

ourCompanyfromJining

Weishite

.

JiningWeishite8.014A.34to14A.36,14A.49,14A.51to

14A.59,14A.71and14A.76(2)(a)

14A.105

Anouncement

CONECTEDTRANSACTIONS

---

FULYEXEMPTCONTINUINGCONECTEDTRANSACTION

DuringtheTrackRecordPeriod,ourCompanyhasleasedcertainapartmentsfromJinan

Tianyeforuseasouremployedormitories,whichisexpectedtocontinueafterListing.The

monthlyrentsduringtheleasingtermaredeterminedonormalcomercialtermsafterarm’s

lengthnegotiationsbetwenbothpartiesandwithreferenceto:(i)theprevailingmarketrentsof

similarapartmentsinthesameornearbyareaorsimilarlocationsinthePRC;(i)theconditions

oftheapartments,includingbutnotlimitedtoitslocationandthefacilitiesasociatedwiththe

apartments;and(i)thestimatedutilitycoststhelesexpectstoconsumeduringtheleasing

term.TherentsundertheApartmentLeasingAgrementareinlinewiththemarketratesof

apartmentsofcomparablesizeandqualitysituatedinthesamelocality,whichshalbeinthebest

interestsofourCompanyandourShareholdersasawhole.

AstheaplicablepercentageratioscalculatedunderChapter14AoftheHongKongListing

Ruleswilbelesthan0.1%,theabovetransactioninrespectofleaseofapartmentsbyour

CompanyfromJinanTianyewilbefulyexemptfromalofthereporting,anualreview,

anouncement,circularandindependentShareholders’aprovalrequirementsunderChapter14A

oftheHongKongListingRulespursuantoRule14A.76(1)oftheListingRules.

PARTIALYEXEMPTCONTINUINGCONECTEDTRANSACTION

PropertyLeasingAgrementwithJiningWeishite

Parties

JiningWeishite(aslesor);and

JiningNewMaterial(aslese).

Principalterms

OnDecember26,2024,JiningNewMaterial,ourwholy-ownedsubsidiary,enteredintoa

propertyleasingagrement(the“PropertyLeasingAgrement”)withJiningWeishite,pursuanto

whichJiningNewMaterialagredtoleasecertainfactorybuilding,ancilaryinfrastructureand

manufacturingequipment(“LeasedProperties”)ownedbyJiningWeishiteforproductionand

operationuses,andwilpaymonthlyrentalpaymentoJiningWeishiteacordingly.

TheinitialtermofthePropertyLeasingAgrementshalcomenceonJanuary1,2025and

enduponDecember31,2025,subjectorenewaluponmutualconsentbytheparties.Sincethe

termoftheleasefalwithinshort-termleaseandarenotrecognizedasright-of-useasetsonour

CONECTEDTRANSACTIONS

---

consolidatedstatementofinancialpositioninacordancewithIFRS16“Leases”,suchtransaction

wilbetreatedascontinuingconectedtransactioninsteadofone-ofconectedtransaction(as

definedunderChapter14AoftheHongKongListingRules)uponListing.

Pricingterms

TherentalpaymentpayablebyustoJiningWeishiteunderthePropertyLeasingAgrementis

baserentalfeofRMB550,000permonth,plusrelevantancilarycosts(primarilyincluding

electricity,telecomunicationsandotherutilities,housingandequipmentrepairandmaintenance

fesandothers)whichmaybeincuredfromtimetotime(colectively,the“RentalPayment”),

whichisdeterminedonormalcomercialtermsafterarm’slengthnegotiationsbetwenthe

relevantparties,withreferencetotheprevailingmarketratesofrelevantfesforpropertiesof

comparablesizeandqualitysituatedinthesamelocalityavailableorchargedbyIndependent

ThirdParties.

Reasonsforthetransaction

JiningWeishitehistoricalyutilizedtheLeasedPropertiesforproductionofgraphiteproducts

forsuplytourGroup.Inearly2024,JiningWeishitedecidedtosuspendproductionduetoits

ownbusinesadjustments.Afterarm’slengthnegotiationwithJiningWeishiteandconsideringour

continuousoperationaldemands,wehaveleasedtheLeasedPropertiesfromJiningWeishitesince

July2024forproductionofgraphiteproducts.Inlightofourlong-standingcoperationhistory

withJiningWeishite,JiningWeishitehasabeterunderstandingofourproductionedsand

propertymaintenancerequirementscomparedwithIndependentThirdParties.Therefore,itisin

thebestinterestsofourGrouptocontinuetoleasetheLeasedPropertiesfromJiningWeishite

upontheListing.

Historicalamounts

Setoutbelowarethehistoricaltransactionamountsfortheabovementionedtransaction

duringtheTrackRecordPeriod:

FortheyearendedDecember31,

Forthethre

monthsended

March31,

(RMBinmilion)

RentalPaymentpaidbyourGroupto

JiningWeishite

.

NilNil3.30

(1)

1.65

Note:

(1)WestartedtoleasetheLeasedPropertiesfromJiningWeishitetoconductourownproductionsinceJuly1,2024.

CONECTEDTRANSACTIONS

---

Proposedanualcapanditsbasis

TheproposedmaximumagregateRentalPaymentamountpayablebyustoJiningWeishite

underthePropertyLeasingAgrementfortheyearendingDecember31,2025isRMB8.0milion.

Theaboveproposedanualcapisdeterminedtakingintoacount:

a)thefixedbaserentalfesetoutunderthePropertyLeasingAgrementandthehistorical

transactionamountsandhistoricaltrendoftheanualRentalPaymentpaidbyour

GrouptoJiningWeishiteduringtheTrackRecordPeriod;

b)thegeographicalocationsoftheLeasedPropertiesandtheprevailingrentalpayment

ratesinsimilarlocationsforpropertiesofcomparablesizeandquality;

c)thecondition,totalsizeandvalueoftheLeasedPropertieswexpectoleasefrom

JiningWeishite;and

d)regardingthestimatedancilarycosts,thegrowthofouractualproduction,andthefair

marketpricesaswelashistoricalfrequencyandamountactualyincured.For

referenceonly,basedonmanagementacountprovidedbyJiningWeishite,theaverage

amountofutilitychargesandmaintenancefesconcerningtheLeasedPropertiesforthe

pastwoyearswereaproximatelyRMB1.0milion.Afewbuferisalsofactoredinfor

posiblerepaircosts,asthewarantyperiodoftheLeasedPropertieshadexpiredbythe

endof2024.

WAIVERAPLICATIONFORTHEPARTIALYEXEMPTCONTINUINGCONECTED

TRANSACTION

InrespectofthepropertyleasingtransactionunderthePropertyLeasingAgrementas

disclosedinthesubsectionheaded“—Partialyexemptcontinuingconectedtransaction”,since

thehighestaplicablepercentageratiocalculatedforthepurposesofChapter14AoftheHong

KongListingRulesfortheyearendingDecember31,2025isexpectedtoexced0.1%butles

than5%onananualbasis,thetransactioncontemplatedthereunderisubjectotheanual

reportingrequirementunderRules14A.49and14A.71oftheHongKongListingRulesandthe

anouncementrequirementunderRule14A.35oftheListingRules.

CONECTEDTRANSACTIONS

---

AsthepropertyleasingtransactionunderthePropertyLeasingAgrementisexpectedto

continueonarecuringandcontinuingbasisandhasbenfulydisclosedinthisprospectus,our

Directorsconsiderthatitwouldbeimpracticalforustostrictlycomplywiththeanouncement

requirementforsuchpartialyexemptcontinuingconectedtransactionuponListing,andsuch

requirementswouldleadtounecesaryadministrativecostsandwouldbeundulyburdensometo

us.

Acordingly,wehaveapliedtotheHongKongStockExchangefor,andtheHongKong

StockExchangehasgranted,awaiverexemptingusfromstrictcompliancewiththeanouncement

requirementunderChapter14AoftheHongKongListingRulesinrespectofthecontinuing

conectedtransactionasdisclosedin“—Partialyexemptcontinuingconectedtransaction”in

thisection,subjectotheconditionthatheagregateamountoftheRentalPaymentpaidto

JiningWeishitefortheyearendingDecember31,2025shalnotexcedtherelevantamountset

forthintheanualcapastatedabove.UpontheListing,apartfromtheanouncement

requirementwaivedbytheStockExchange,theCompanywilcomplywiththeotherelevant

requirementsunderChapter14AoftheListingRules.

IntheventofanyfutureamendmentstotheHongKongListingRulesimposingmore

stringentrequirementsthanthoseaplicableasoftheLatestPracticableDateonthecontinuing

conectedtransactionreferedtointhisprospectus,wewiltakeimediatestepstoensure

compliancewithsuchnewrequirementswithinreasonabletime.

Wewilcomplywiththenaplicableaprovalandisclosurerequirementsunderelevant

lawsandregulationsandlistingrules(includingtheHongKongListingRules)forfuturerenewal

ofthePropertyLeasingAgrementbeforeitsexpiry,ifandwheneded.

CONFIRMATIONFROMOURDIRECTORS

OurDirectors(includingourindependentnon-executiveDirectors)areoftheviewthathe

partialyexemptcontinuingconectedtransactionasetoutabovehasbenandwilcontinueto

becariedoutinourordinaryandusualcourseofbusinesandonormalcomercialtermsor

beter,andisfairandreasonableandintheinterestofourCompanyandShareholdersasawhole,

andtheproposedanualcapforsuchtransactionisfairandreasonableandintheinterestofour

CompanyandShareholdersasawhole.

CONFIRMATIONFROMTHEJOINTSPONSORS

HavingtakenintoacountheviewoftheDirectorsandtheJointSponsors’participationin

duediligence,theJointSponsorsareoftheviewthathepartialyexemptcontinuingconected

transactionasetoutabovehasbenandwilbecariedoutintheordinaryandusualcourseof

CONECTEDTRANSACTIONS

---

businesofourCompanyandonormalcomercialterms,andisfairandreasonableinthe

interestsofourCompanyandtheShareholdersasawhole,andtheproposedanualcapforsuch

transactionisfairandreasonableandintheinterestofourCompanyandShareholdersasawhole.

INTERNALCONTROLMEASURESTOSAFEGUARDSHAREHOLDERS’INTERESTS

InordertofurthersafeguardtheinterestsoftheShareholdersasawhole(includingthe

minorityShareholders),ourGrouphasimplementedthefolowinginternalcontrolmeasuresin

relationtothecontinuingconectedtransactioncontemplatedunderthePropertyLeasing

Agrement:

(a)Wehaveadoptedaconectedtransactionsmanagementpolicyforthepurposeof

ensuringthatconectedtransactionsofourGroupwilbeconductedinafairmaner,on

normalcomercialtermsandintheinterestsofourCompanyandourShareholdersasa

whole;

(b)Wehaveputinplaceaseriesofinternalguidelineswhichprovidethatifthevalueof

anyproposedconectedtransactionisexpectedtoexcedcertainthresholds,the

relevantstafmustreportheproposedtransactionstotheheadoftherelevantbusines

unitinorderforourCompanytocomencethenecesaryaditionalasesmentand

aprovalproceduresandensurethatwewilcomplywiththeaplicablerequirements

underChapter14AoftheHongKongListingRules;and

(c)OurCompanywilprovideinformationandsuportingdocumentstotheindependent

non-executiveDirectorsandtheauditorsinorderforthemtoconductananualreview

ofthecontinuingconectedtransactionsenteredintobyourCompany.Inacordance

withtherequirementsundertheHongKongListingRules,theindependent

non-executiveDirectorswilprovideananualconfirmationtotheBoardastowhether

thecontinuingconectedtransactionshavebenenteredintointheordinaryandusual

courseofbusinesofourGroup,areonormalcomercialtermsandareinacordance

withtheagrementgoverningthemontermsthatarefairandreasonableandinthe

interestsoftheShareholdersasawhole,andtheauditorswilprovideananual

confirmationtotheBoardastowhetheranythinghascometotheiratentionthatcauses

themtobelievethathecontinuingconectedtransactionshavenotbenaprovedby

theBoard,arenotinacordancewiththepricingpoliciesofourGroupinalmaterial

respects,arenotenteredintoinacordancewiththerelevantagrementsgoverningthe

transactionsinalmaterialrespectsorhavexcededthecap.

CONECTEDTRANSACTIONS

---

SUBSTANTIALSHAREHOLDERS

SofarasourDirectorsareaware,imediatelyfolowingthecompletionoftheGlobal

Ofering(asumingthat(i)nonewSharesareisuedunderour2024RestrictedShareIncentive

Schemeand(i)notherchangesaremadetotheisuedsharecapitalofourCompanybetwenthe

LatestPracticableDateandListing),thefolowingpersonswilhaveinterestsand/orshort

positionsintheSharesorunderlyingsharesofourCompanywhichwouldfaltobedisclosed

pursuantotheprovisionsofDivisions2and3ofPartXVoftheSFO,or,directlyorindirectly,be

interestedin10%ormoreoftheisuedvotingsharesofourCompany:

AsumingthatheOver-alotmentOption

arenotexercised

AsumingthatheOver-alotmentOption

arefulyexercised

NameofShareholderNatureofinterest

Clasandnumberof

Sharesdirectlyand

indirectlyheld

Aproximate

percentageof

interestinthetotal

isuedsharecapital

ofourCompanyas

oftheLatest

PracticableDate

Aproximate%of

shareholdinginour

AShares

imediatelyafter

theGlobalOfering

Aproximate%of

shareholdinginthe

totalsharecapitalof

ourCompany

imediatelyafter

theGlobalOfering

Aproximate%of

shareholdinginour

AShares

imediatelyafter

theGlobalOfering

Aproximate%of

shareholdinginthe

totalsharecapitalof

ourCompany

imediatelyafter

theGlobalOfering

Mr.ZongYanmin

.

Beneficialowner129,302,726

AShares

30.09%30.09%27.08%30.09%26.68%

Interestincontroled

corporation

(1)

38,038,884

AShares

8.85%8.85%7.97%8.85%7.85%

ShanghaiMaiming

.

Beneficialowner

(1)

23,133,000

AShares

5.38%5.38%4.85%5.38%4.77%

ShanghaiZhuao

.

Beneficialowner

(1)

12,900,000

AShares

3.00%3.00%2.70%3.00%2.66%

GuocaiEquityInvestmentFund

(Jinan)LimitedPartnership

(LimitedPartnership)(国材股

权投资基金(济南)合伙企

业(有限合伙)

.

Beneficialowner

(2)

38,673,994

AShares

9.00%9.00%8.10%9.00%7.98%

SUBSTANTIALSHAREHOLDERS

---

AsumingthatheOver-alotmentOption

arenotexercised

AsumingthatheOver-alotmentOption

arefulyexercised

NameofShareholderNatureofinterest

Clasandnumberof

Sharesdirectlyand

indirectlyheld

Aproximate

percentageof

interestinthetotal

isuedsharecapital

ofourCompanyas

oftheLatest

PracticableDate

Aproximate%of

shareholdinginour

AShares

imediatelyafter

theGlobalOfering

Aproximate%of

shareholdinginthe

totalsharecapitalof

ourCompany

imediatelyafter

theGlobalOfering

Aproximate%of

shareholdinginour

AShares

imediatelyafter

theGlobalOfering

Aproximate%of

shareholdinginthe

totalsharecapitalof

ourCompany

imediatelyafter

theGlobalOfering

LiaoningZhongdeIndustrial

EquityInvestmentFund

LimitedPartnership(Limited

Partnership)(辽宁中德产业股

权投资基金合伙企业(有限合

伙)

.

Beneficialowner

(3)

23,700,878

AShares

5.52%5.52%4.96%5.52%4.89%

Interestsheldjointly

withotherperson

(3)

10,280,571

AShares

2.39%2.39%2.15%2.39%2.12%

LiaoningHaitongNewEnergy

LowCarbonIndustrialEquity

InvestmentFundCo.,Ltd.

(辽宁海通新能源低碳产业股

权投资基金有限公司)

.

Beneficialowner

(3)

7,477,863

AShares

1.74%1.74%1.57%1.74%1.54%

Interestsheldjointly

withotherperson

(3)

26,503,586

AShares

6.17%6.17%5.55%6.17%5.47%

HaitongInovationSecurities

InvestmentCo.,Ltd.(海通创

新证券投资有限公司)

.

Beneficialowner

(3)

2,802,708

AShares

0.65%0.65%0.59%0.65%0.58%

Interestsheldjointly

withotherperson

(3)

31,178,741

AShares

7.26%7.26%6.53%7.26%6.43%

HuaweiInvestmentHoldingCo.,

Ltd.(华为投资控股

有限公司)

.

Interestincontroled

corporation

(4)

27,262,500

AShares

6.34%6.34%5.71%6.34%5.63%

HaboTechnologyVenture

CapitalCo.,Ltd.(哈勃科技创

业投资有限公司)

.

Beneficialowner

(4)

27,262,500

AShares

6.34%6.34%5.71%6.34%5.63%

Notes:

(1)AsoftheLatestPracticableDate,Mr.Zong,asthesolemanagingpartnerandgeneralpartnerofeachofShanghai

MaimingandShanghaiZhuao,wasresponsibleformanagementandexercisingthevotingrightsatachingtothe

SharesheldbyeachofShanghaiMaimingandShanghaiZhuao,inacordancewiththepartnershipagrement

enteredintoamongthegeneralandlimitedpartnersofeachofShanghaiMaimingandShanghaiZhuao,

respectively.FordetailsofShanghaiMaimingandShanghaiZhuao,sethesectionheaded“History—

SUBSTANTIALSHAREHOLDERS

---

EstablishmentofEmployeShareholdingPlatforms”inthisdocument.Therefore,Mr.Zongwasdemedtobe

interestedinthe23,133,000ASharesand12,900,000ASharesheldbyShanghaiMaimingandShanghaiZhuaoin

ourCompany,respectively.ByvirtueofPartXVoftheSFO,interestincontroledcorporationalsoincludesthe

2,005,884ASharesrepurchasedbyourCompanyastreasurysharesasoftheLatestPracticableDate.

(2)AsoftheLatestPracticableDate,GuocaiEquityInvestmentFund(Jinan)LimitedPartnership(Limited

Partnership)(国材股权投资基金(济南)合伙企业(有限合伙)(“JinanGuocai”)isinterestedin38,673,994AShares

ofourCompany.ChinaNationalBuildingMaterialPrivateEquityFundManagement(Beijing)Co.,Ltd.(中建材私

募基金管理(北京)有限公司)isthexecutivepartnerofJinanGuocai.JinanGuocaihastenlimitedpartners,each

ofwhomholdslesthan30%oftheintereststherein.

(3)AsoftheLatestPracticableDate,(i)GuotaiHaitongSecuritiesCo.,Ltd.(国泰海通证券股份有限公司)(“GTHT

Securities”)directlyheld100%ofthequityinterestinHaitongInovationSecuritiesInvestmentCo.,Ltd.(海通

创新证券投资有限公司)(“HaitongInovation”),(i)GTHTSecuritiesindirectly(throughitswholy-owned

subsidiariesHaitongKaiyuanInvestmentCo.,Ltd.(海通开元投资有限公司)(“HaitongKaiyuan”)andHaitong

Inovation)heldinagregate49.90%ofthequityinterestinLiaoningHaitongNewEnergyLowCarbon

IndustrialEquityInvestmentFundCo.,Ltd.(辽宁海通新能源低碳产业股权投资基金有限公司)(“Liaoning

HaitongNewEnergy”),and(i)GTHTSecuritiesindirectly(throughHaitongKaiyuan)held51%ofthequity

interestinthegeneralandexecutivepartnerofLiaoningZhongdeIndustrialEquityInvestmentFundLimited

Partnership(LimitedPartnership)(辽宁中德产业股权投资基金合伙企业(有限合伙)(“LiaoningZhongde”),

namelyHaitongNewEnergyPrivateEquityInvestmentManagementCo.,Ltd.(海通新能源私募股权投资管理有限

公司),andHaitongKaiyuanwasalimitedpartnerofLiaoningZhongdewith19.60%limitedpartnershipinterest.

LiaoningZhongdehasninelimitedpartners,eachofwhomholdslesthan30%oftheintereststherein.Therefore,

byvirtueofPartXVoftheSFO,LiaoningZhongde,LiaoningHaitongNewEnergyandHaitongInovationare

partiesactinginconcertinrespectoftheirshareholdinginourAShares.Eachofthemisdemedtobeinterestedin

theinterestofeachotherinourCompany.

(4)AsoftheLatestPracticableDate,HaboTechnologyVentureCapitalCo.,Ltd.(哈勃科技创业投资有限公司)

(“HaboCapital”)wasinterestedin27,262,500AShares.HaboTechnologyVentureCapitalCo.,Ltd.iswholy

ownedbyHuaweiInvestmentHoldingCo.,Ltd.(华为投资控股有限公司)(“HuaweiInvestment”).Therefore,

HuaweiInvestmentwasdemedtobeinterestedinthe27,262,500ASharesheldbyHaboCapital.

Saveasdisclosedaboveandinsectionheaded“ApendixVI—StatutoryandGeneral

Information—C.FurtherInformationaboutourDirectors,SupervisorsandSeniorManagement”,

ourDirectorsarenotawareofanyotherpersonwhowil,imediatelyfolowingthecompletionof

theGlobalOfering(asumingthatnonewSharesareisuedunderour2024RestrictedShare

IncentiveSchemeandnotherchangesaremadetotheisuedsharecapitalofourCompany

betwentheLatestPracticableDateandListing),haveanyinterestand/orshortpositionsinthe

SharesorunderlyingsharesofourCompanywhichwouldfaltobedisclosedtotheCompany

pursuantotheprovisionsofDivisions2and3ofPartXVoftheSFO,or,whois,directlyor

indirectly,interestedin10%ormoreofthenominalvalueofanyclasofoursharecapital

caryingrightstovoteinalcircumstancesatgeneralmetingsofourCompany.

SUBSTANTIALSHAREHOLDERS

---

Thisectionpresentscertaininformationregardingoursharecapitalbeforeandupon

completionoftheGlobalOfering.

BEFORETHEGLOBALOFERING

AsoftheLatestPracticableDate,thetotalisuedcapitalofourCompanywas429,711,044*

ASharesofnominalvalueofRMB1.00each,alofwhicharelistedontheSTARMarket.

Note:

*Including2,005,884ASharesrepurchasedbyourCompanypursuantotherepurchasemandatesaprovedbythe

Board,acountingforaproximately0.47%ofthetotalnumberofASharesinisueasoftheLatestPracticable

Date.

UPONCOMPLETIONOFTHEGLOBALOFERING

ImediatelyfolowingtheGlobalOfering,asuming(i)theOver-alotmentOptionisnot

exercised,(i)nonewSharesareisuedunderour2024RestrictedShareIncentiveSchemeand

(i)notherchangesaremadetotheisuedsharecapitalofourCompanybetwentheLatest

PracticableDateandListing,thesharecapitalofourCompanywilbeasfolows:

DescriptionofSharesNumberofShares

Aproximate

percentageof

thenlarged

sharecapital

ASharesinisue*

.

429,711,04490.00%

HSharestobeisuedpursuantotheGlobalOfering

.

47,745,70010.00%

Total

.

477,456,744100.00%

ImediatelyfolowingtheGlobalOfering,asuming(i)theOver-alotmentOptionis

exercisedinful,(i)nonewSharesareisuedunderour2024RestrictedShareIncentiveScheme

and(i)notherchangesaremadetotheisuedsharecapitalofourCompanybetwentheLatest

PracticableDateandListing,thesharecapitalofourCompanywilbeasfolows:

DescriptionofSharesNumberofShares

Aproximate

percentageto

totalsharecapital

ASharesinisue*

.

429,711,04488.67%

HSharestobeisuedpursuantotheGlobalOfering

.

54,907,50011.33%

Total

.

484,618,544100.00%

SHARECAPITAL

---

Note:

*Including2,005,884ASharesrepurchasedbyourCompanypursuantotherepurchasemandatesaprovedbythe

Board.

RANKING

OurHSharesandourASharesareregardedasoneclasofSharesandwilrankparipasu

witheachotherinalotherespectsand,inparticular,wilrankequalyforaldividendsor

distributionsdeclared,paidormadeafterthedateofthisprospectus.Aldividendsinrespectof

ourHSharesaretobepaidbyusinHongKongdolarswhereasaldividendsinrespectofourA

SharesaretobepaidbyusinRenminbi.Inaditiontocash,dividendsmayalsobedistributedin

theformofShares.HoldersofourHShareswilreceivesharedividendsintheformofHShares,

andholdersofourAShareswilreceivesharedividendsintheformofAShares.

OURSHARES

OurHSharesinisueuponcompletionoftheGlobalOfering,andourAShares,are

ordinarySharesinoursharecapitalandareconsideredasoneclasofShares.Shanghai-Hong

KongStockConecthasestablishedastockconectmechanismbetwenmainlandChinand

HongKong.OurASharescanbesubscribedforandtradedbymainlandChineseinvestors,

qualifiedforeigninstitutionalinvestorsorqualifiedforeignstrategicinvestorsandmustbetraded

inRenminbi.AsourASharesareligiblesecuritiesundertheNorthboundTradingLink,theycan

alsobesubscribedforandtradedbyHongKongandotheroverseasinvestorspursuantotherules

andlimitsofShanghai-HongKongStockConect.OurHSharescanbesubscribedforortraded

byHongKongandotheroverseasinvestorsandqualifiedomesticinstitutionalinvestors.IfourH

SharesareligiblesecuritiesundertheSouthboundTradingLink,theycanalsobesubscribedfor

andtradedbymainlandChineseinvestorsinacordancewiththerulesandlimitsof

Shanghai-HongKongStockConectorShenzhen-HongKongStockConect.

NOCONVERSIONOFOURASHARESINTOHSHARESFORLISTINGANDTRADING

ONTHEHONGKONGSTOCKEXCHANGE

OurASharesandourHSharesaregeneralyneitherinterchangeablenorfungible,andthe

marketpricesofourASharesandourHSharesmaybediferentaftertheGlobalOfering.The

GuidelinesonAplicationfor“FulCirculation”ofDomesticUnlistedSharesofH-share

Companies(《H股公司境内未上市股份申请“全流通”业务指引》)anouncedbytheCSRCarenot

aplicabletocompaniesdualylistedinthePRCandontheHongKongStockExchange.Asofthe

LatestPracticableDate,therewerenorelevantrulesorguidelinesfromtheCSRCprovidingthatA

ShareholdersmayconvertAsharesheldbythemintoHsharesforlistingandtradingontheHong

KongStockExchange.

SHARECAPITAL

---

APROVALFROMHOLDERSOFASHARESREGARDINGTHEGLOBALOFERING

AprovalfromholdersofASharesisrequiredforourCompanytoisueHSharesandsek

thelistingofHSharesontheHongKongStockExchange.Suchaprovalwasobtainedbyusat

theshareholders’generalmetingofourCompanyheldonFebruary19,2025andisubjectothe

folowingconditions:

(i)Sizeoftheofer.TheproposednumberofHSharestobeoferedshalnotexced15%

ofthetotalisuedsharecapitalenlargedbytheHSharestobeisuedpursuantothe

GlobalOfering(beforethexerciseoftheOver-alotmentOption).ThenumberofH

ShareswhichmaybeisuedpursuantothefulexerciseoftheOver-alotmentOption

shalnotexced15%ofthetotalnumberofHSharestobeoferedinitialyunderthe

GlobalOfering.

(i)Methodofofering.Themethodofoferingshalbebywayofaninternationalofering

toinstitutionalinvestorsandapublicoferforsubscriptioninHongKong.

(i)Targetinvestors.TheHShareshalbeisuedtopublicinvestorsinHongKongunder

theHongKongPublicOferingandinternationalinvestors,qualifiedomestic

institutionalinvestorsinmainlandChinandotherinvestorswhoareaprovedby

mainlandChineseregulatorybodiestoinvestabroadinInternationalOfering.

(iv)Pricedeterminationbasis.TheisuepriceofHShareswilbenegotiatedand

determinedamongtheBoardand/oritsauthorizedpersonsandunderwriters,as

authorizedbytheShareholders’generalmeting,afterdueconsiderationoftheinterests

oftheCompany’sexistingShareholdersandforeigninvestors,byreferencetothe

conditionsofinternationalcapitalmarketsandtheHongKongstockmarketisuances,

thegeneralvaluationlevelsofcomparablecompaniesintheindustryandthemarket

subscriptionconditionsathetimeofofering,aswelasbasedonthedemandfor

foreignordersandtheresultsofbok-building.

(v)Validityperiod.TheisueofHSharesandlistingofHSharesontheHongKongStock

Exchangeshalbecompletedwithin18monthsfromthedateofaprovalbythegeneral

metingoftheCompanyonFebruary19,2025.

TherearenotheraprovedexistingoferingplansforourSharesexceptfortheGlobal

Ofering.

SHAREHOLDERS’GENERALMETINGS

Fordetailsofcircumstanceunderwhichourshareholders’generalmetingisrequired,se

“ApendixVI—SumaryofArticlesofAsociation—ShareholdersandGeneralMeting”to

thisprospectus.

SHARECAPITAL

---

THECORNERSTONEPLACING

Wehaventeredintocornerstoneinvestmentagrements(eacha“CornerstoneInvestment

Agrement”andcolectively,the“CornerstoneInvestmentAgrements”)withthecornerstone

investorsetoutbelow(eacha“CornerstoneInvestor”andcolectively,the“Cornerstone

Investors”),pursuantowhichtheCornerstoneInvestorshaveagredto,subjectocertain

conditions,subscribe,orcausetheirdesignatedentitiestosubscribe,atheOferPriceforsuch

numberofOferShares(roundedowntothenearestwholeboardlotof100OferShares)that

maybepurchasedforanagregateamountofHK$740.2milion,calculatedbasedonthe

conversionrateofUS$1.00toHK$7.8499(the“CornerstonePlacing”).Theagregateamountof

theinvestmentcontributedbytheCornerstoneInvestorsdoesnotincludebrokerage,SFC

transactionlevy,AFRCtransactionlevyandHongKongStockExchangetradingfewhichthe

CornerstoneInvestorswilpayinrespectoftheInternationalOferSharestobesubscribedby

them.

BasedonanOferPriceofHK$42.80perHShare,beingthemaximumOferPrice,thetotal

numberofOferSharestobesubscribedbytheCornerstoneInvestorswouldbe17,295,200Ofer

Shares.Thetablebelowreflectstheshareholdingpercentageimediatelyafterthecompletionof

theGlobalOfering.

AsumingtheOver-alotmentOptionisnotexercisedAsumingtheOver-alotmentOptionisexercisedinful

Aproximate%ofthe

OferShares

Aproximate%ofthe

totalisuedsharecapital

Aproximate%ofthe

OferShares

Aproximate%ofthe

totalisuedsharecapital

36.22%3.62%31.50%3.57%

OurCompanyisoftheviewthatheinvestmentsbyCornerstoneInvestorswilhelpraisethe

profileofourCompanyandtosignifythatsuchinvestorshaveconfidenceinourbusinesand

prospect.Further,webelievethatwewilbenefitfromthecornerstoneinvestment,takinginto

acounthebusinesectorstheyprimarilyfocuson.OurCompanybecameacquaintedwitheach

oftheCornerstoneInvestorsinitsordinarycourseofoperationthroughtheGroup’sbusines

networkorthroughintroductionbytheCompany’sbusinespartners,theOveralCordinatorsor

theotherCMIs.

TheCornerstonePlacingwilformpartoftheInternationalOfering,andsaveasotherwise

obtainedconsentbytheStockExchange,theCornerstoneInvestorswilnotsubscribeforany

OferSharesundertheGlobalOferingotherthanpursuantotheCornerstoneInvestment

Agrements.TheOferSharestobesubscribedbytheCornerstoneInvestorswilrankparipasu

inalrespectswiththefulypaidSharesinisueandaltheHSharestobesubscribedbythe

cornerstoneinvestorswilbecountedtowardsthepublicfloatforthepurposeofRule8.08(as

amendedandreplacedbyRule19A.13A)oftheListingRules.Imediatelyfolowingthe

completionoftheGlobalOfering,theCornerstoneInvestorswilnothaveanyBoard

representationinourCompany;andnoneoftheCornerstone

CORNERSTONEINVESTORS

---

InvestorswilbecomeasubstantialShareholderofourCompany.TheCornerstoneInvestorsdonot

haveanypreferentialrightsintheCornerstoneInvestmentAgrementscomparedwithotherpublic

Shareholders,otherthanaguarantedalocationoftherelevantOferSharesatheOferPrice.

AsconfirmedbyeachoftheCornerstoneInvestors,therearenosidearangementsor

agrementsbetwenourCompanyandtheCornerstoneInvestorsoranybenefit,directorindirect,

conferedontheCornerstoneInvestorsbyvirtueoforinrelationtotheListing,otherthana

guarantedalocationoftherelevantOferSharesathefinalOferPrice,folowingtheprinciples

asetoutinChapter4.15oftheGuideforNewListingAplicants.

TheCornerstoneInvestorshaveagredtopayfortherelevantOferSharesthatheyhave

subscribedbeforedealingsintheCompany’sSharescomenceontheStockExchange.The

CornerstoneInvestorshaveagredthatourCompanyandtheSponsor-OCmayintheirsole

discretiondeferthedeliveryofalorpartoftheOferSharesitwilsubscribetobemadeona

datelaterthantheListingDate.Suchdelayedeliveryarangementisinplacetofacilitatethe

over-alocationintheInternationalOfering.Therewilbenodelayedeliveryifthereisno

over-alocationintheInternationalOfering.Ifthereisover-alocationintheInternational

Ofering,thesetlementofsuchover-alocationmaybefectedthroughdelayedeliveryofthe

OferSharestobesubscribedbycertainCornerstoneInvestorsundertheCornerstonePlacing.

Wheredelayedeliverytakesplace,eachCornerstoneInvestorthatmaybeafectedbysuch

delayedeliveryhasagredthatitshalneverthelespayfortherelevantOferSharesinful

beforetheListing.Asuch,therewilbenodeferedsetlementoftheOferSharestobe

subscribedbytheCornerstoneInvestorspursuantotheCornerstoneInvestmentAgrements.

Tothebestoftheknowledge,informationandbeliefofourCompany,(i)theCornerstone

InvestorsareindependentoftheCompany,itsconectedpersonsandtheirespectiveasociates;

(i)noneoftheCornerstoneInvestorisacustomedtotakeandhasnotakeninstructionsfromthe

Company,ourDirectors,Supervisors,chiefexecutive,ControlingShareholders,substantial

Shareholders,existingShareholdersoranyofitsubsidiariesortheirespectivecloseasociatesin

relationtotheacquisition,disposal,votingorotherdispositionoftheOferShares;and(i)none

ofthesubscriptionoftheOferSharesbytheCornerstoneInvestorsisfinancedbytheCompany,

ourDirectors,Supervisors,chiefexecutive,ControlingShareholders,substantialShareholders,

existingShareholdersoranyofitsubsidiariesortheirespectivecloseasociates.

CORNERSTONEINVESTORS

---

TothebestknowledgeoftheCompanyandtheOveralCordinators,andbasedonthe

indicativeinterestofinvestmentoftheCornerstoneInvestorsand/ortheircloseasociatesasofthe

dateofthisprospectus,certainCornerstoneInvestorsand/ortheircloseasociatesmayparticipate

intheInternationalOferingasplacesandsubscribeforfurtherOferSharesintheGlobal

Ofering.TheCompanywilsektheStockExchange’sconsentand/orwaivertoalowthe

CornerstoneInvestorsand/ortheircloseasociatestoparticipateintheInternationalOferingas

placespursuantoChapter4.15oftheGuideforNewListingAplicants.Whethersuch

CornerstoneInvestorsand/ortheircloseasociateswilplaceordersintheInternationalOfering

areuncertainandwilbesubjectothefinalinvestmentdecisionsofsuchinvestorsandtheterms

andconditionsoftheGlobalOfering.

TothebestknowledgeofourCompany,theCornerstoneInvestorsmakeindependent

investmentdecisions,andtheirsubscriptionundertheCornerstoneInvestmentAgrementswould

befinancedbytheirowninternalresourcesor(inthecaseofCornerstoneInvestorswhichare

fundsorinvestmentmanagers)theasetsmanagedforitsinvestorsasitsourceofundingforthe

subscriptionoftheOferShares,andtheyhavesuficientfundstosetletheirespective

investmentundertheCornerstonePlacing.EachoftheCornerstoneInvestorhasconfirmedthatal

necesaryaprovalshavebenobtainedwithrespectotheCornerstonePlacing,andthatno

specificaprovalfromanystockexchange(ifrelevant)oritshareholdersisrequiredforthe

relevantcornerstoneinvestment.

ThetotalnumberofOferSharestobesubscribedbycertainCornerstoneInvestorsmaybe

afectedbyrealocationoftheOferSharesbetwentheInternationalOferingandtheHongKong

PublicOfering.IfthetotaldemandforHSharesintheHongKongPublicOferingfalswithin

thecircumstanceasetoutinthesectionheaded“StructureoftheGlobalOfering—TheHong

KongPublicOfering—Realocation”inthisProspectus,theCompanyandtheSponsor-OChave

theabsolutediscretiontodeducthenumberofOferSharestobesubscribedbysuchCornerstone

InvestorsinordertosatisfythepublicdemandsundertheHongKongPublicOferingpursuanto

requirementunderparagraph3.2ofPracticeNote18oftheListingRules,andthedetailsofthe

actualnumberofOferSharestobealocatedtotheCornerstoneInvestorswilbedisclosedinthe

alotmentresultsanouncementofourCompanytobepublishedonoraroundAugust18,2025.

CORNERSTONEINVESTORS

---

ThetablebelowsetsforththedetailsoftheCornerstonePlacing:

BasedontheOferPriceofHK$42.80(beingthemaximumOferPrice)

AsumingtheOver-alotmentOptionisnot

exercised

AsumingtheOver-alotmentOptionis

fulyexercised

CornerstoneInvestors

TotalInvestment

Amount

(1)

NumberofOfer

Shares

(2)

Aproximate%of

theOferShares

Aproximate%of

ourtotalisued

sharecapital

(3)

Aproximate%of

theOferShares

Aproximate%of

ourtotalisued

sharecapital

(3)

GuonengEnvironmentalProtection

InvestmentGroupCo.,Limited(国能环

保投资集团有限公司)(“Guoneng

EnvironmentalProtection”)

(4)

.

US$50,000,0009,170,40019.21%1.92%16.70%1.89%

MiraeAsetSecurities(HK)Limited

(“MiraeAsetSecurities”)

.

US$15,000,0002,751,1005.76%0.58%5.01%0.57%

SDGAsetManagement(HK)Limited

(“SDGAset”)

(4)

.

HK$100,000,0002,336,4004.89%0.49%4.26%0.48%

H&TInteligentControlInternationalCo.,

Limited(“H&T”)

.

HK$80,000,0001,869,1003.91%0.39%3.40%0.39%

Mr.LanKun(兰坤)

.

HK$50,000,0001,168,2002.45%0.24%2.13%0.24%

Notes:

(1)Exclusiveofbrokerage,theSFCtransactionlevy,theStockExchangetradingfeandtheAFRCtransactionlevy,

andtobeconvertedtoHongKongdolarsbasedonthexchangerateasdisclosedinthisprospectus.

(2)Subjectoroundingdowntothenearestwholeboardlotof100OferShares.Calculatedbasedonthexchange

ratesetoutinthesectionheaded“InformationabouthisProspectusandtheGlobalOfering—Curency

Translations.”

(3)Thecalculationofthepercentageincludes2,005,884ASharesbeingheldastreasurySharesrepurchasedbyour

CompanypursuantotherepurchasemandatesaprovedbyShareholdersasoftheLatestPracticableDate.

(4)Basedonpublicinformation,asoftheLatestPracticableDate,GuonengEnvironmentalProtectionandSDGAset

arecontroledbyShandongprovincial-levelgovernmentandlocalgovernmentimediatelyunderShandong

provincial-levelgovernment,respectively.Asuch,theshareholdingsofGuonengEnvironmentalProtectionand

SDGAsetintheCompanywilbeagregatedwhencalculatingpublicfloatoftheCompanyunderRule8.08(1)

(asamendedandreplacedbyRule19A.13A)oftheListingRules.BasedontheOferPriceofHK$42.80(beingthe

maximumOferPrice),asumingtheOver-alotmentOptionisnotexercisedandthereisnoadjustmentothetotal

numberofOferSharestobealocatedtoSDGAsetandGuonengEnvironmentalProtection,imediatelyupon

completionoftheGlobalOfering,theagregatedshareholdingofSDGAsetandGuonengEnvironmental

ProtectionintheCompanywouldbe11,506,800HShares,representingaproximately2.42%ofthetotalisued

sharecapitaloftheCompany(excluding2,005,884ASharesrepurchasedbytheCompanyastreasurySharesasof

theLatestPracticableDate),thereforewilnotadverselyafectheCompany’satisfactionofpublicfloat

requirementsundertheListingRules.

THECORNERSTONEINVESTORS

TheinformationaboutourCornerstoneInvestorsetforthbelowhasbenprovidedbyour

CornerstoneInvestorsinconectionwiththeCornerstonePlacing.

CORNERSTONEINVESTORS

---

GuonengEnvironmentalProtection

GuonengEnvironmentalProtectionInvestmentGroupCo.,Limited(国能环保投资集团有限

公司)(“GuonengEnvironmentalProtection”)wasincorporatedinHongKongwithlimited

liabilityonNovember22,2021,andisprincipalyengagedindebtisuance,investment,trade&

comerce,asetmanagementandmodernservices.ItiswholyownedbyJinanEnergyGroupCo.,

Ltd.(济南能源集团有限公司),astate-ownedenergymanufacturingandsuplycompany

controledbyStated-ownedAsetsSupervisionandAdministrationComisionofJinan

Government.

MiraeAsetSecurities

MiraeAsetSecurities(HK)Limited(“MiraeAsetSecurities”),awholyownedsubsidiary

ofMiraeAsetSecuritiesCo.,Ltd(“MiraeSecurities”),wasestablishedinHongKonginJuly

2005andislicensedbytheSFCtocaryontype9(asetmanagement)regulatedactivity.Alof

theinvestors’fundmanagedbyMiraeAsetSecuritiesarefromIndependentThirdPartiesand

noneoftheinvestorsholdmorethan30%interestinthefund.MiraeSecuritiesisoneofthe

largestinvestmentbanksincorporatedintheRepublicofKorea,providingacomprehensiverange

ofinancialservicesincludingbrokerage,wealthmanagement,investmentbanking,sales&

trading,andprincipleinvestments.ThecompanyisultimatelycontroledbyMiraeAsetCapital

Co.,Ltd.,afinancialinvestmentcompanyincorporatedintheRepublicofKorea.Thecompany

engagesprimarilyincorporatelending,structuredfinance,andstrategicinvestmentstosuporthe

broaderMiraeAsetFinancialGroup.MiraeSecuritiesislistedontheKoreaExchangeunder

stockcode006800.KS.

SDGAset

SDGAsetManagement(HK)Limited(“SDGAset”)hasenteredintoacornerstone

investmentagrementinitscapacityastheinvestmentmanagerforandonbehalfofSDGAset

Management(HK)Limited-ClientAcount3(“ClientAcount3”).SDGAsetisaprivate

companylimitedbyshares,incorporatedinHongKongonApril26,2016toengageinprovision

ofasetmanagementservices.ItislicensedbytheSFCundertheSFOtocaryoutType4

(advisingonsecurities)andType9(asetmanagement)regulatedactivities,withCEnumber

BHO423.ThesoleshareholderofSDGAsetisSDGSecurities(HK)Limited,acompanylicensed

bytheSFCundertheSFOtocaryoutType1(dealinginsecurities)andType4(advisingon

securities)withCEnumberBMB958andprimarilyengagesinprovisionoftradingservicesin

HongKongstocks,bonds,aswelasIPOsubscriptionservices.SDGSecurities(HK)Limitedis

anindirectwholy-ownedsubsidiaryofShandongGoldGroupCo.,Ltd.,whichisastate-owned

goldminingcompanycontroledbyStated-ownedAsetsSupervisionandAdministration

ComisionofShandongProvincialGovernment(“ShandongSASAC”).

CORNERSTONEINVESTORS

---

SDGAsetmanagesthefundsofClientAcount3onbehalfofGuohui(HK)HoldingsCo.,

Limited.TheinvestmentportfoliofClientAcount3mayincludealocationstoHongKong

IPOs,HongKong-listedequities,HongKongequity-relatedfunds,andliquiditymanagement

productsuchastimedepositsandmoneymarketfunds.Guohui(HK)HoldingsCo.,Limitedisa

directwholy-ownedsubsidiaryofShandongDevelopmentInvestmentHoldingGroupCo.,Ltd.,

whichisastate-ownedinvestmentholdingcompanycontroledbyShandongSASAC.

H&T

H&TInteligentControlInternationalCo.,Limited(“H&T”)wasincorporatedinHongKong

withlimitedliabilityonFebruary8,2011,andisprincipalyengagedinR&Dofinteligent

controlerproducts,import-exportrade,andinvestmentmanagement.H&Tiswholyownedby

ShenzhenH&TInteligentControlCo.,Ltd.(深圳和而泰智能控制股份有限公司),acompany

listedontheShenzhenStockExchange(stockcode:002402.SZ).

Mr.LanKun(兰坤)

Mr.LanKunisanindividualinvestorandisthefounder,executivedirectorandmajor

shareholderofShenzhenDream’ePrivateEquitySecuritiesFundManagementCo.,Ltd.(深圳君

宜私募证券基金管理有限公司)andDream’e(HongKong)CapitalLtd.(君宜(香港)资本有限公

司),whichprimarilyfocusoninvestmentsinIPOplacingsandrefinancingmarket.Mr.LanKun

hasbenengagingininvestmentbankingandasetmanagementforover20years,with

particularlystableandoutstandinginvestmentperformanceinthehedgefundmanagement.Mr.

LanKunisalsothefounderofShenzhenLeft-upCharityFoundation(深圳市尚佐慈善基金会).

Mr.LanisanIndependentThirdParty.

CLOSINGCONDITIONS

TheobligationofeachCornerstoneInvestortosubscribefortheOferSharesunderthe

respectiveCornerstoneInvestmentAgrementisubjecto,amongotherthings,thefolowing

closingconditions:

(i)theHongKongUnderwritingAgrementandtheInternationalUnderwritingAgrement

beingenteredintoandhavingbecomefectiveandunconditional(inacordancewith

theirespectiveoriginaltermsorasubsequentlywaivedorvariedbyagrementofthe

partiesthereto)bynolaterthanthetimeandateaspecifiedintheHongKong

UnderwritingAgrementandtheInternationalUnderwritingAgrement,andneitherthe

HongKongUnderwritingAgrementnortheInternationalUnderwritingAgrement

havingbenterminated;

CORNERSTONEINVESTORS

---

(i)theOferPricehavingbenagreduponbetwenourCompanyandtheSponsor-OC(for

themselvesandonbehalfoftheunderwritersoftheGlobalOfering);

(i)theListingComitehavingrantedtheaprovalforthelistingof,andpermisionto

dealin,theShares(includingtheSharesundertheCornerstonePlacing)aswelasother

aplicablewaiversandaprovalsandsuchaproval,permisionorwaiverhavingnot

benrevokedpriortothecomencementofdealingsintheSharesontheStock

Exchange;

(iv)nolawshalhavebenenactedorpromulgatedwhichprohibitstheconsumationof

thetransactionscontemplatedintheGlobalOferingortherespectiveCornerstone

InvestmentAgrement,andtherebeingnordersorinjunctionsfromacourtof

competentjurisdictioninefectprecludingorprohibitingconsumationofsuch

transactions;and

(v)therespectiveagrements,representations,waranties,undertakings,confirmationsand

acknowledgementsoftheCornerstoneInvestorsundertherespectiveCornerstone

InvestmentAgrementare(asofthedateoftheCornerstoneInvestmentAgrement)and

wilbe(asoftheClosing(asdefinedintheCornerstoneInvestmentAgrement)

acurateandtrueinalrespectsandnotmisleadingandthathereisnomaterialbreach

oftherespectiveCornerstoneInvestmentAgrementonthepartoftherelevant

CornerstoneInvestor.

RESTRICTIONSONTHECORNERSTONEINVESTORS

EachCornerstoneInvestorhasagredthatwithouthepriorwritenconsentofourCompany,

theJointSponsorsandtheSponsor-OC,itwilnot,whetherdirectlyorindirectly,atanytime

duringtheperiodofsixmonthsfolowingtheListingDate(the“Lock-upPeriod”),disposeof,in

anyway,anyoftheOferSharesithaspurchased,pursuantotherespectiveCornerstone

InvestmentAgrement,saveforcertainlimitedcircumstances,suchastransferstoanyofits

wholy-ownedsubsidiarieswhowilbeboundbythesameobligationsoftheCornerstoneInvestor,

includingtheLock-upPeriodrestriction.

CORNERSTONEINVESTORS

---

Youshouldreadthefolowingdiscusionandanalysisinconjunctionwithour

consolidatedfinancialstatements,includedintheAcountant’sReportinApendixI,together

withtherespectiveacompanyingnotes.Ourconsolidatedfinancialinformationhasben

preparedinacordancewithIFRS.

Thefolowingdiscusionandanalysiscontainforward-lokingstatementsthatinvolve

risksanduncertainties.Thesestatementsarebasedonourasumptionsandanalysisinlightof

ourexperienceandperceptionofhistoricaltrends,curentconditions,andexpectedfuture

developments,aswelasotherfactorsthatwebelieveareapropriateunderthecircumstances.

However,ouractualresultscouldifermaterialyfromthoseanticipatedinthese

forward-lokingstatementsasaresultofvariousfactors,includingthosesetforthunder“Risk

Factors”andelsewhereinthisprospectus.

OVERVIEW

Wearealeaderintheproductionofwidebandgapsemiconductormaterials,focusingonthe

research,developmentandindustrializationofSiCsubstratesinceourinceptionin2010.

Leveragingourin-houseR&Dcapabilities,wemasteredthecoretechnologiescoveringalstages

ofSiCsubstrateproduction,includingequipmentdesign,thermalfieldesign,powdersynthesis,

crystalgrowth,substrateprocesingandqualityinspection.Thisenabledourmasproductionof

8-inchSiCsubstratesin2023,overcomingthechalengesofhigh-qualitygrowthinterfacecontrol

andefectcontrolintheproductionofSiCsubstrates.InNovember2024,weintroducedthe

industry’sfirst12-inchSiCsubstrate,whichmarksasignificantstepintotheraoflargeSiC

substrates.

Wehavexperiencedstrongrevenuegrowthinrecentyears.Ourevenueincreasedby

199.9%fromRMB417.0milionin2022toRMB1,250.7milionin2023,andincreasedby41.4%

fromRMB1,250.7milionin2023toRMB1,768.1milionin2024.Ourevenuedecreasedby

4.2%fromRMB426.1milioninthethremonthsendedMarch31,2024toRMB408.0milionin

thesameperiodof2025.WehadalosofRMB175.7milionandRMB45.7milionin2022and

2023andaprofitofRMB179.0milionin2024.WehadaprofitofRMB46.1milionandRMB8.5

milioninthethremonthsendedMarch31,2024and2025,respectively.

BASISOFPRESENTATION

OurhistoricalfinancialinformationhasbenpreparedinacordancewithIFRS,isuedbythe

InternationalAcountingStandardsBoard.Thehistoricalfinancialinformationhasbenprepared

underthehistoricalcostconvention,asmodifiedbytherevaluationofinancialasetsand

financialiabilitiesatfairvaluethroughprofitorlos,whicharecariedatfairvalue.

FINANCIALINFORMATION

---

ThepreparationofthehistoricalfinancialinformationinconformitywithIFRSrequiresthe

useofcertaincriticalacountingestimates.Italsorequiresmanagementoexerciseitsjudgmentin

theprocesofaplyingouracountingpolicies.Theareasinvolvingahigherdegreofjudgment

orcomplexity,orareaswhereasumptionsandestimatesaresignificantothehistoricalfinancial

informationaredisclosedinNote5totheAcountant’sReportinApendixItothisprospectus.

KEYFACTORSAFECTINGOURESULTSOFOPERATIONS

Thegrowthandfuturesucesofourbusinesdependonmanyfactors.Whileachofthese

factorspresentsignificantoportunitiesforourbusines,theyalsoposeimportantchalengesthat

wemustsucesfulyadresinordertosustainourgrowthandimproveouresultsofoperations.

GeneralFactors

(cid:129)overaleconomicgrowthandconditions;

(cid:129)developmentandprosperityoftheglobalsemiconductorindustry,inparticularthepower

semiconductorindustry;

(cid:129)conditionsofthedownstreamarketsofthesemiconductorindustryandtheresulting

fluctuationsincustomerdemand;

(cid:129)technologydevelopmentandcompetitioninthesemiconductorindustry;and

(cid:129)relevantlawsandregulations,governmentpoliciesandinitiatives.

CompanySpecificFactors

OurComitmentoR&DandTechnologyInovation

Oursucesandcompetitiveadvantagesdependonourcapabilitytocontinuouslydevelop

andofercuting-edgeSiCsubstrateproducts.Inthefieldofwidebandgapsemiconductors,SiC

substratesplaysacriticalroleanditsproductionhashightechnicalbariers.DedicatedtoSiCfor

over14years,wearecomitedtoprovideourcustomerswiththeSiCsubstratesofquality,

continuouslyenhancingtheperformanceoftheirproductsacrosdiferentindustriesthrough

materialinovation.DuringtheTrackRecordPeriod,weprimarilyofered4-inch,6-inchand

8-inchSiCsubstrates,andwewereoneofthefewcompaniesworldwidethatcouldoferboth

conductiveandsemi-insulatingSiCsubstratesinvariousdiameters.

FINANCIALINFORMATION

---

Thehighcompetitivenatureofsemiconductorindustryrequiresourelentlesfocusonand

investmentinR&Dactivities.OurR&Dfocusonforward-lokingtechnologiesandlarge-diameter

products.WehaveinvestedandwilcontinueinvestsignificantresourcesinR&Dactivitiesinthe

futuretoachievetechnologicalbreakthroughs,aswelasmaintainourtechnologicaleadershipand

thecompetitivenesofourproductsandsolutions.OurR&DexpensesamountedtoRMB127.6

milion,RMB137.2milion,RMB141.8milion,RMB22.3milionandRMB44.9milionin2022,

2023,2024andthethremonthsendedMarch31,2024and2025,respectively,acountingfor

30.6%,11.0%,8.0%,5.2%and11.0%ofourevenueinthesameyears,respectively.Wehavea

robustR&Dteamof194employesasofMarch31,2025,whosexpertisecoversfromproduct

developmentoindustrializationwithsolidpracticalexperienceintechnicaldevelopmentand

large-scaleproduction.WhilethistrategymayelevateR&Dexpenses,itwilpositionuscloserto

ourcustomers,enablingustorespondpromptlytotheirequirements,expediteproductlaunches

andbolstercustomeretention.OuroutstandingR&Dacomplishmentsareatestamentour

robustR&Dcenter.AsoftheLatestPracticableDate,wehadbengranted502patents,including

194inventionpatents,14ofwhichinventionpatentswerefromregionsoutsidemainlandChina.

Technologicalinovationisalsocriticaltourcompetitiveadvantage.AsoftheLatest

PracticableDate,wehadmasteredcoretechnologiescoveringequipmentdesign,thermalfield

design,powdersynthesis,crystalgrowth,andsubstrateprocesing,includingbutnotlimitedto,

monocrystalineSiCgrowthequipmentandthermalfieldesignandmanufacturingtechnology,

high-puritySiCpowderpreparationtechnology,aswelaspreciseimpuritycontroltechnologyand

electricalperformancecontroltechnology.Asourbusinesgrows,wexpectobenefitfromour

acumulatedtechnologicalexpertisetofostersustainedinovationwitheightenedeficiency.

OurAbilitytoOferCompetitiveProductsandEnrichProductOferings

OurproductsareprimarilybasedonthemonocrystalineSiCtechnologies,andourfuture

sucesdependsonthesucesfulexpansionofourSiCsubstrateproductportfolioandcustomer

base.Wehaveachievedmasuplyofproductsincluding4-inchsubstrates,6-inchsubstrates,and

8-inchsubstrates.InNovember2024,weanouncedthelaunchoftheindustry’sfirst12-inchSiC

substrate,whichmarksasignificantstepintotheraoflarge-diameterSiCsubstrates.Acording

toFrost&Sulivan,intermsofrevenuefromSiCsubstratesalesin2024,wewereamongthetop

threglobalSiCmanufacturerswithamarketshareof16.7%.

Ourcustomersareconstantlysekingnewproductswithlargerdiameterandbeter

performance,andoursucesreliesheavilyonourabilitytocontinuetodevelopandprovideour

customerswithnewproductsandimprovementsofexistingproducts.AcordingtoFrost&

Sulivan,largerdiameterSiCsubstratestypicalyachieverelativelyhighergrosprofitmarginsdue

to(i)premiumpricingpoweresultingfromthelimitednumberofmanufacturerswith

large-diameterproductioncapabilities,and(i)strongcustomerwilingnestopayforcost

FINANCIALINFORMATION

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advantagesthesesubstratesdeliver,aslargerdiameterSiCsubstratesgeneralyreduceaverage

productioncostsfordownstreamcustomersbyminimizingedgewaste.DuringtheTrackRecord

Period,ourconductiveSiCsubstratesareprimarilyusedinpowersemiconductordeviceswith

widespreadaplicationsinelectricvehicles,AIdatacenters,photovoltaicsystems,rail

transportation,powergrids,householdapliances,advancedtelecomunicationbasestationsand

AIglases.Semi-insulatingSiCsubstratesareprimarilyusedinradiofrequencysemiconductor

devicesfortelecomunications.Thegrowthofourevenuedependsonourabilitytomake

technologicaladvancementsandeveloproductsandsolutionswithigh-performancethatmet

thevolvingdemandofourdownstreamcustomersinvariousaplicationfields.

Ourcontinuedsucesdependsignificantlyonourabilitytofercompetitiveinovative

high-performanceproductsandenrichproductoferingstocatertocustomers’evolvingdemands.

Wealsoplantodiversifyourproductsandsolutionstoseizemarketoportunitiesfromabroad

rangeofaplicationscenarios.

OurAbilitytoGrowOurCustomerBaseandDepenExistingCustomerRelationships

WearecomitedtoprovideourcustomerswiththeSiCsubstratesofthehighqualityfinest

quality,empoweringthenergyeficiencyoftheirproductsacrosdiferentindustries.Duringthe

TrackRecordPeriod,ourproductsweresoldmainlythroughdirectsales,whichisinlinewiththe

industrypractice,acordingtoFrost&Sulivan.Wehavestablishedaglobalsaleservice

networkthatcoversChina,JapanandEuropeandwearededicatedtorefiningourglobalsales

networkinfrastructureandenhancinglocalizedservices,enablingustomorefectivelyidentify

andmethenedsofbothdomesticandinternationalcustomers,providetimelyresponsesto

variousbusinesdemandsfromourglobalcustomers.Aditionaly,ourmarketingcenteris

primarilyresponsibleforconectingwithcustomersandprovidingthemwithtechnicalsuportand

after-saleservices.Wehavebeninwel-establishedandstablecustomerelationshipwithour

customers,inclusiveofwel-knowndomesticandforeigncompanies.AsofMarch31,2025,we

hadestablishedbusinesrelationshipswithoverhalfoftheglobaltoptenpowersemiconductor

devicemanufacturersintermsofrevenuein2024.Inthelongrun,weplantoatractnew

customersacrosabroaderspectrumofindustriesbycontinualylaunchingnewproductsfornovel

aplicationsandepencolaborationswithexistingcustomersbyexploringnewareasof

coperationwithournewandenhancedoferings.Aloyalandgrowingcustomerbasewilhelpus

increaseourshipments,therebyhelpimproveourevenueandgrosprofitmargin,consolidating

ourmarketleadership.

Wemployacomprehensivecustomerstrategythatspansthentirelifecycle,from

acquisitiontoproductdelivery,enhancingourindustryreputationandinfluence.Webuilda

closelyconectedecosystemwithourcustomersfromthedesign-instagebymaintainingclose

comunicationwithourcustomerstogainadepunderstandingoftheirnedsandthecompetitive

FINANCIALINFORMATION

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landscape.ByvirtueofourstrongR&Dcapacity,technologicaladvantages,excelentproduct

quality,strongdeliveryandcustomerservicecapabilities,wehavebenabletomaintainrobust

andsustainablecoperationwithleadingcustomerstoachievedesign-win.DuringtheTrack

RecordPeriod,ourcustomersdemonstratedhighloyalty,whichwasatributednotonlytour

outstandingproductqualitybutalsotothecolaborativecosystemthatwestablishedwiththem.

OurProductionCapacityandProceses

Stableandscalableproductioncapacityisakeyfactortoursuces.DuringtheTrack

RecordPeriod,weproducedourSiCsubstratesatourtwoproductionplants,namelytheShandong

productionplantandtheShanghaiproductionplant.

Wehavedevelopedandimplementedaninformationsystemtofacilitatetheprocesingof

customerordersandtheproductionprocescontrol.Wehavealsointegratedartificialinteligence

digitalsimulationandbigdatatechnologytoautomateourproductionprocesofourSiC

substrates.AsofMarch31,2025,our6-inchSiCsubstrateproductionlinehadachievedahigh

levelofautomationandour8-inchSiCsubstrateproductionlinehadachievedfulautomation,

layingasolidfoundationforourtechnologicalupgradesandproductiteration.

Weplantoprudentlyandeficientlyexpandourproductioncapacitytosustainourleadership

positionsothatwearepoisedtomethescalatingmarketdemandforSiCproductstogrowour

revenueandrealiseconomiesofscale.Thesucesfulupgradeandexpansionofourproduction

capability,whichcanbecapital-intensive,requiretheabilitytoformulateandexecuteupgradeand

expansionplans,expandandconstructnewfacilitiesandmaintainandpurchaseproduction

equipmentincost-efectiveandeficientmaners.Ourcapitalexpenditures,whichcomprises

purchaseofproperty,plantandequipment,intangibleasetsandright-of-useasets,were

RMB1,034.0milion,RMB1,395.2milion,RMB567.9milion,RMB235.3milionandRMB121.2

milionin2022,2023,2024andthethremonthsendedMarch31,2024and2025,respectively.

Aswecontinuetoexpandourproductioncapacity,wexpectocontinuetoincursubstantial

capitalexpenditures,whichmaybeadjustedacordingtourdevelopmentplansorinlightof

marketconditionsandotherfactorswebelievetobeapropriate.

OurAbilitytoControlCostsandImproveOperationalEficiency

CostcontrolcapabilityisoneofthekeycompetitivebariersintheSiCsubstrateindustry,

acordingtoFrost&Sulivan.WeincuredcostofsalesofRMB450.0milion,RMB1,068.7

milion,RMB1,332.7milion,RMB334.3milionandRMB315.5milionin2022,2023,2024and

thethremonthsendedMarch31,2024and2025,respectively,whichwereprimarilyinlinewith

thegrowthofoursales.Ourgroslosmarginwas7.9%in2022whilewehaveachieveda

turnaroundwithgrosprofitmarginof14.6%in2023,24.6%in2024,and21.5%and22.7%inthe

FINANCIALINFORMATION

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thremonthsendedMarch31,2024and2025,respectively.Aswecontinuetoscaleupourmas

productionofSiCsubstrates,wexpectobeabletomanagetheincreaseinourcostofsales,

includingtherawmaterial,energy,laborcostsandepreciationandamortizationofpropertiesand

equipment,whilesustainingmorerapidrevenuegrowth,fulyunleashingtheconomiesofscale.

Inadition,weareimprovingourmanagerialperformancebyinvestinginourITsystemsto

enhanceouroperationaleficiency,whichinreturnoptimize,amongothers,manufacturingcosts.

Ourabilitytocontinuouslymaintainandenhanceourprofitabilityandoperatingeficiency

dependsignificantlyonourabilitytomanageandoptimizeourcostsandoperatingexpenses.We

activelyimplementleanproductionprinciples,developstandardizedproductionprocesesand

introduceadvancedautomationandinteligentequipmentoenhancethestabilityandreliabilityof

theproductionproces.Weconsistentlymonitor,analyzeandimproveourproductionproceses,

andourobustproductionmanagementcapabilitiesenableustoleadtheindustryinlarge-scale

delivery.OurSiCsubstrateshaveachievednear-zeromicropipesasmanifestedbynostacking

faults,lowbasalplanedislocation(BPD)density,lowthreadingscrewdislocation(TSD)density

andlowthreadingedgedislocation(TED)density,showcasingourleadershipinproductionquality

management.WehavefurtherdevelopedandimplementedaZero-DefectPlan,aimingfor

high-qualityproductsandefect-fredelivery.

MATERIALACOUNTINGPOLICIES

Thepreparationofthehistoricalfinancialinformationrequirestheuseofacounting

estimateswhich,bydefinition,wilseldomequaltheactualresults.Managementalsonedsto

exercisejudgmentinaplyingouracountingpolicies.Thestimatesandjudgmentsthathavea

significantriskofcausingamaterialadjustmentothecaryingamountsofasetsandliabilities

areadresedbelow.

Estimatesandjudgmentsarecontinualyevaluated.Theyarebasedonhistoricalexperience

andotherfactors,includingexpectationsofutureventsthatmayhaveafinancialimpactonus

andthatarebelievedtobereasonableunderthecircumstances.

RevenueRecognition

Revenueisrecognisedtodepicthetransferofgodstocustomersinanamounthatreflects

theconsiderationtowhichwexpectobentitledinexchangeforthosegods.Specificaly,we

usea5-stepaproachtorevenuerecognition:

(cid:129)Step1:Identifythecontract(s)withacustomer

(cid:129)Step2:Identifytheperformanceobligationsinthecontract

FINANCIALINFORMATION

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(cid:129)Step3:Determinethetransactionprice

(cid:129)Step4:Alocatethetransactionpricetotheperformanceobligationsinthecontract

(cid:129)Step5:Recogniserevenuewhen(oras)thentitysatisfiesaperformanceobligation

Revenueisrecognisedwhen,oras,obligationsunderthetermsofacontractaresatisfied,

whichocurswhencontrolofthepromisedproductsorservicesistransferedtocustomers.

Revenueismeasuredatheamountofconsiderationwexpectoreceiveinexchangefor

transferingproductsorservicestoacustomer(“transactionprice”).

Whentheconsiderationinacontractincludesavariableamount,theamountofconsideration

isestimatedtowhichwewilbentitledinexchangefortransferingthegodsorservicestothe

customer.Thevariableconsiderationisestimatedatcontractinceptionandconstraineduntilitis

highlyprobablethatasignificantrevenuereversalintheamountofcumulativerevenuerecognised

wilnotocurwhentheasociateduncertaintywiththevariableconsiderationisubsequently

resolved.

Whenthecontractcontainsafinancingcomponentwhichprovidesthecustomerwitha

significantbenefitofinancingthetransferofgodsorservicestothecustomerformorethanone

year,revenueismeasuredathepresentvalueoftheamountreceivable,discountedusingthe

discountratethatwouldbereflectedinaseparatefinancingtransactionbetwenusandthe

customeratcontractinception.Whenthecontractcontainsafinancingcomponentwhichprovides

uswithasignificantfinancialbenefitformorethanoneyear,revenuerecognisedunderthe

contractincludestheinterestexpenseacretedonthecontractliabilityunderthefectiveinterest

method.Foracontractwheretheperiodbetwenthepaymentbythecustomerandthetransferof

thepromisedgodsorservicesisoneyearorles,thetransactionpriceisnotadjustedforthe

efectsofasignificantfinancingcomponent,usingthepracticalexpedientinIFRS15.

Whenvolumerebatesareprovidedtocertaincustomersoncethequantityofproducts

purchaseduringtheperiodexcedsathresholdspecifiedinthecontract,rebatesareofsetagainst

amountspayablebythecustomer.Toestimatethevariableconsiderationforthexpectedfuture

rebates,themostlikelyamountmethodisused.In2022,2023,2024andthethremonthsended

March31,2024and2025,thevolumerebatesweprovidedamountedtonil,nil,RMB30.8milion,

RMB4.3milionandnil,respectively.Wedidnothavesuchvolumerebatearangementsinplace

in2022or2023.In2024,weintroducedthisincentiveaftermutualagrementwithcertain

customertoencourageincreasedpurchasevolumes.Theserebateshavebenetedofagainstour

revenueinthecorespondingperiod.

FINANCIALINFORMATION

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Revenueisrecognisedeitheratapointintimeorovertime,whenwesatisfyperformance

obligationsbytransferingthepromisedgodsorservicestoitscustomers.

Acontractasetrepresentsourightoconsiderationinexchangeforgodsorservicesthat

wehavetransferedtoacustomerthatisnotyetunconditional.Incontrast,areceivablerepresents

ourunconditionalrightoconsideration,i.e.onlythepasageoftimeisrequiredbeforepayment

ofthatconsiderationisdue.

Acontractliabilityrepresentsourobligationtotransfergodsorservicestoacustomerfor

whichGrouphasreceivedconsideration(oranamountofconsiderationisdue)fromthecustomer.

Furtherdetailsofourevenueandotherincomerecognitionpoliciesareasfolows:

Revenuefromsaleofgods

Revenuefromcontractswithcustomersisrecognisedathepointintimewhencontrolof

godsistransferedtothecustomers,generalywhenwehavedeliveredgodstothelocation

specifiedinthesalescontractandthebuyerhasconfirmedtheaceptanceofthegods.

Thecreditperiodgrantedtocustomersbyusisdeterminedbasedontheircreditrisk

characteristics.Wedonotexpectoanycontractswheretheperiodbetwenthetransferofthe

promisedgodstothecustomerandpaymentbythecustomerexcedoneyear.Asaconsequence,

thereisnosignificantfinancingcomponent.

Rentalincome

Rentalincomeisrecognisedonatimeproportionbasisovertheleaseterms.

Provisionofpropertymanagementservices

Revenuefromtheprovisionofpropertymanagementservicesisrecognisedoverthe

scheduledperiodonastraight-linebasisbecausethecustomersimultaneouslyreceivesand

consumesthebenefitsprovidedbyus.

Interestincome

Interestincomeisrecognisedonanacrualbasisusingthefectiveinterestmethodby

aplyingtheratethatexactlydiscountsthestimatedfuturecashreceiptsoverthexpectedlifeof

thefinancialinstrumentorashorterperiod,whenapropriate,tothenetcaryingamountofthe

financialaset.

FINANCIALINFORMATION

---

Property,plantandequipment

Property,plantandequipmentarestatedintheconsolidatedstatementsofinancialposition

atcostlesubsequentacumulatedepreciationandacumulatedimpairmentloses,ifany.The

costofproperty,plantandequipmentincludesitspurchasepriceandthecostsdirectlyatributable

totheacquisitionoftheitems.

Subsequentcostsareincludedintheaset’scaryingamountorecognisedasaseparate

aset,asapropriate,onlywhenitisprobablethatfutureconomicbenefitsasociatedwiththe

itemwilflowtousandthecostoftheitemcanbemeasuredreliably.Thecaryingamountofthe

replacedpartisderecognised.Alotherepairsandmaintenancearerecognisedasanexpensein

profitorlosduringtheperiodinwhichtheyareincured.

Property,plantandequipmentaredepreciatedsoastowriteoftheircostorvaluationetof

expectedresidualvalueovertheirestimatedusefulivesonastraight-linebasis.Theusefulives,

residualvalueandepreciationmethodarereviewed,andadjustedifapropriate,athendof

eachreportingperiod.Theusefulivesareasfolows:

PropertyandBuildings20–30years

Productionequipment3–10years

Electronicequipment3years

Transportationvehicle4years

Oficequipment5years

Leaseholdimprovement3−5years,ortermsofleasecontract

Anasetiswritendownimediatelytoitsrecoverableamountifitscaryingamountis

higherthantheaset’sestimatedrecoverableamount.

Anitemofproperty,plantandequipmentisderecognisedupondisposalorwhenofuture

economicbenefitsarexpectedtoarisefromthecontinueduseoftheaset.Anygainorlos

arisingonderecognitionoftheaset(calculatedasthediferencebetwenthenetdisposal

procedsandthecaryingamountoftheitem)isincludedinprofitorlosintheperiodinwhich

theitemisderecognised.

FINANCIALINFORMATION

---

Right-of-useaset

Theright-of-useasetisrecognisedatcostandwouldcomprise:(i)theamountoftheinitial

measurementoftheleaseliability(sebelowfortheacountingpolicytoacountforlease

liability);(i)anyleasepaymentsmadeatorbeforethecomencementdate,lesanylease

incentivesreceived;(i)anyinitialdirectcostsincuredbythelese;and(iv)anestimateof

coststobeincuredbytheleseindismantlingandremovingtheunderlyingasetothe

conditionrequiredbythetermsandconditionsofthelease,unlesthosecostsareincuredto

produceinventories.Wemeasuretheright-of-useasetsaplyingacostmodel.Underthecost

model,wemeasuretheright-to-useasetatcost,lesanyacumulatedepreciationandany

impairmentloses,andadjustedforanyremeasurementofleaseliability.

Theright-of-useasetisubsequentlydepreciatedusingthestraight-linemethodfromthe

dateofinitialaplicationovertheshorteroftheremainingleasetermortheusefulifeofthe

underlyingaset.Theusefulives,residualvalueandepreciationmethodarereviewed,and

adjustedifapropriate,athendofeachreportingperiod.

Inadition,theright-of-useasetisreducedbyimpairmentloses,ifany,andadjustedfor

certainremeasurementsoftheleaseliability.

Impairmentlosonfinancialasets

Werecognisealosalowanceforexpectedcreditlos(“ECL”)onfinancialasetswhichare

subjectoimpairmentunderIFRS9“FinancialInstruments”.TheamountofECLisupdatedathe

endofeachreportingperiodtoreflectchangesincreditrisksinceinitialrecognition.

LifetimeECLrepresentstheECLthatwilresultfromalposibledefaulteventsoverthe

expectedlifeoftherelevantinstrument.Incontrast,12-monthECL(“12mECL”)representsthe

portionoflifetimeECLthatisexpectedtoresultfromdefaulteventsthatareposiblewithin12

monthsafterthereportingdate.Asesmentsaredonebasedonourhistoricalcreditlos

experience,adjustedforfactorsthatarespecifictothedebtors,generaleconomiconditionsand

anasesmentofboththecurentconditionsathereportingdateaswelastheforecastofuture

conditions.

FINANCIALINFORMATION

---

WehavelectedtomeasurelosalowancesfortradereceivablesusingIFRS9simplified

aproachandalwaysrecogniselifetimeECLfortradereceivables.TheECLonthesefinancial

asetsareasesedcolectivelyusingaprovisionmatrixbasedonourhistoricalcreditlos

experience,adjustedforfactorsthatarespecifictothedebtors,generaleconomiconditionsand

anasesmentofboththecurentaswelastheforecastdirectionofconditionsathereporting

date,includingtimevalueofmoneywhereapropriate.

Forotherfinancialinstruments,wemeasurethelosalowancequalto12mECL,unles

therehasbenasignificantincreaseinthecreditrisksinceinitialrecognitionorevidencethata

financialasetiscredit-impaired,thenwerecogniselifetimeECL.Theasesmentofwhether

lifetimeECLshouldberecognisedisbasedonsignificantincreasesinthelikelihodoriskofa

defaultocuringsinceinitialrecognition.

Significantincreaseincreditrisk

Inasesingwhetherthecreditriskonafinancialinstrumenthasincreasedsignificantlysince

initialrecognition,wecomparetheriskofadefaultocuringonthefinancialinstrumentasathe

reportingdatewiththeriskofadefaultocuringonthefinancialinstrumentasathedateof

initialrecognition.Inmakingthisasesment,weconsiderbothquantitativeandqualitative

informationthatisreasonableandsuportable,includinghistoricalexperienceandforward-loking

informationthatisavailablewithoutunduecostorefort.Forward-lokinginformationconsidered

includesthefutureprospectsoftheindustriesinwhichourdebtorsoperateobtainedfrom

economicexpertreports,financialanalystsandgovernmentalbodies,aswelasconsiderationof

variousexternalsourcesofactualandforecasteconomicinformationthatrelatetourcore

operations.

Inparticular,thefolowinginformationistakenintoacountwhenasesingwhethercredit

riskhasincreasedsignificantly:

(cid:129)anactualorexpectedsignificantdeteriorationinthefinancialinstrument’sexternal(if

available)orinternalcreditrating;

(cid:129)significantdeteriorationinexternalmarketindicatorsofcreditriskforaparticular

financialinstrument,e.g.asignificantincreaseinthecreditspread,orthecreditdefault

swapricesforthedebtor;

(cid:129)existingorforecastadversechangesinbusines,financialoreconomiconditionsthat

arexpectedtocauseasignificantdecreaseinthedebtor’sabilitytometitsdebt

obligations;

FINANCIALINFORMATION

---

(cid:129)anactualorexpectedsignificantdeteriorationintheoperatingresultsofthedebtor;

(cid:129)anactualorexpectedsignificantadversechangeintheregulatory,economic,or

technologicalenvironmentofthedebtorthatresultsinasignificantdecreaseinthe

debtor’sabilitytometitsdebtobligations.

Irespectiveoftheoutcomeoftheaboveasesment,wepresumethathecreditriskhas

increasedsignificantlysinceinitialrecognitionwhencontractualpaymentsaremorethan30days

pastdue,unleswehavereasonableandsuportableinformationthatdemonstratesotherwise.

Despitetheaforegoing,weasumethathecreditriskonadebtinstrumenthasnotincreased

significantlysinceinitialrecognitionifthedebtinstrumentisdeterminedtohavelowcreditriskat

thereportingdate.Adebtinstrumentisdeterminedtohavelowcreditriskifi)ithasalowriskof

default,i)theborowerhasastrongcapacitytometitscontractualcashflowobligationsinthe

neartermandi)adversechangesineconomicandbusinesconditionsinthelongertermay,

butwilnotnecesarily,reducetheabilityoftheborowertofulfilitscontractualcashflow

obligations.Weconsideradebtinstrumentohavelowcreditriskwhenithasaninternalor

externalcreditratingof“investmentgrade”asperglobalyunderstodefinition.

Weregularlymonitorthefectivenesofthecriteriausedtoidentifywhethertherehasben

asignificantincreaseincreditriskandrevisesthemasapropriatetoensurethathecriteriare

capableofidentifyingsignificantincreaseincreditriskbeforetheamountbecomespastdue.

MeasurementandrecognitionofECL

ThemeasurementofECLisafunctionoftheprobabilityofdefault,losgivendefault(i.e.

themagnitudeofthelosifthereisadefault)andthexposureatdefault.Theasesmentofthe

probabilityofdefaultandlosgivendefaultisbasedonhistoricaldatadjustedby

forward-lokinginformation.EstimationofECLreflectsanunbiasedandprobability-weighted

amounthatisdeterminedwiththerespectiverisksofdefaultocuringastherelevantweighting.

Generaly,theECListhediferencebetwenalcontractualcashflowsthatareduetousin

acordancewiththecontractandalthecashflowsthatwexpectoreceive,discountedathe

efectiveinterestratedeterminedatinitialrecognition.

WhereECLismeasuredonacolectivebasistocaterforcaseswherevidenceathe

individualinstrumentlevelmaynotyetbeavailable,thefinancialinstrumentsaregroupedonthe

folowingbasis:

FINANCIALINFORMATION

---

(cid:129)Natureofinancialinstruments(i.e.ourtradereceivablesandothereceivablesareach

asesedasaseparategroup.NotereceivablesareasesedforECLonanindividual

basis);

(cid:129)Past-duestatus;

(cid:129)Nature,sizeandindustryofdebtors;and

(cid:129)Externalcreditratingswhereavailable.

Thegroupingisregularlyreviewedbymanagementoensuretheconstituentsofeachgroup

continuetosharesimilarcreditriskcharacteristics.

Interestincomeiscalculatedbasedonthegroscaryingamountofthefinancialasetunles

thefinancialasetiscreditimpaired,inwhichcaseinterestincomeiscalculatedbasedon

amortisedcostofthefinancialaset.

Werecogniseanimpairmentgainorlosinprofitorlosforalfinancialinstrumentsby

adjustingtheircaryingamounthroughalosalowanceacount.

Share-basedTransaction

Equity-setledshare-basedpaymentstoemployes(includingourDirectors)aremeasuredat

thefairvalueofthequityinstrumentsathegrantdate.Thecostofequity-setledtransactions

withemployesforgrantsismeasuredbyreferencetothefairvalueathedateatwhichtheyare

granted,furtherdetailsofwhicharegiveninote40totheAcountants’ReportinApendixIto

thisprospectus.

Thecostofequity-setledtransactionsisrecognizedinexpense,togetherwitha

corespondingincreaseinequity,overtheperiodinwhichtheperformanceand/orservice

conditionsarefulfiled.Thecumulativexpenserecognizedforequity-setledtransactionsathe

endofeachreportingperioduntilthevestingdatereflectsthextentowhichthevestingperiod

hasexpiredandourbestestimateofthenumberofequityinstrumentsthatwilultimatelyvest.

Thechargeorcreditothestatementofprofitorlosforaperiodrepresentsthemovementinthe

cumulativexpenserecognizedasathebeginingandendofthatperiod.

FINANCIALINFORMATION

---

Serviceandnon-marketperformanceconditionsarenotakenintoacountwhendetermining

thegrantdatefairvalueofawards,buthelikelihodoftheconditionsbeingmetisasesedas

partofourbestestimateofthenumberofequityinstrumentsthatwilultimatelyvest.Market

performanceconditionsarereflectedwithinthegrantdatefairvalue.Anyotherconditionsatached

toanaward,butwithoutanasociatedservicerequirement,areconsideredtobenon-vesting

conditions.Non-vestingconditionsarereflectedinthefairvalueofanawardandleadtoan

imediatexpensingofanawardunlestherearealsoserviceand/orperformanceconditions.

Forawardsthatdonotultimatelyvestbecausenon-marketperformanceand/orservice

conditionshavenotbenmet,noexpenseisrecognized.Whereawardsincludeamarketor

non-vestingcondition,thetransactionsaretreatedasvestingirespectiveofwhetherthemarketor

non-vestingconditionisatisfied,providedthatalotherperformanceand/orserviceconditionsare

satisfied.

Wherethetermsofanequity-setledawardaremodified,asaminimumanexpenseis

recognizedasifthetermshadnotbenmodified,iftheoriginaltermsoftheawardaremet.In

adition,anexpenseisrecognizedforanymodificationthatincreasesthetotalfairvalueofthe

share-basedpayments,orisotherwisebeneficialtothemployeasmeasuredathedateof

modification.

Whereanequity-setledawardiscanceled,itistreatedasifithadvestedonthedateof

cancelation,andanyexpensenotyetrecognizedfortheawardisrecognizedimediately.This

includesanyawardwherenon-vestingconditionswithinthecontrolofeitherusorthemploye

arenotmet.However,ifanewawardisubstitutedforthecanceledaward,andisdesignatedasa

replacementawardonthedatethatitisgranted,thecanceledandnewawardsaretreatedasifthey

wereamodificationoftheoriginalaward,asdescribedinthepreviousparagraph.

Thedilutivefectofoutstandingrestrictedsharesisreflectedasaditionalsharedilutionin

thecomputationofearningspershare.

FINANCIALINFORMATION

---

RESULTSOFOPERATIONS

Thefolowingtablesetsforthasumaryofourconsolidatedresultsofoperationsforthe

periodspresented:

YearEndedDecember31,ThremonthsendedMarch31,

(RMBinthousands)

(unaudited)

Revenue

.

417,0351,250,6961,768,141426,068407,961

Costofsales

.

(449,987)(1,068,660)(1,332,688)(334,322)(315,521)

Gros(los)/profit

.

(32,952)182,036435,45391,74692,440

Otherincome

.

2,08251760737168

Othergainsandloses,net

.

51,53354,85288,94523,72017,985

Netinvestmentincome/(expense)

.

36,22723,268762917(215)

Reversal/(provision)ofimpairmentloseson

financialasets

.

1,057(10,972)(10,166)(2,828)1,038

Selingexpenses

.

(13,931)(20,427)(28,827)(4,057)(5,301)

Administrativexpenses

.

(111,531)(163,295)(189,438)(45,047)(52,283)

R&Dexpenses

.

(127,560)(137,210)(141,845)(22,283)(44,938)

Financeincome/(expense),net

.

18,13515,2205,9043,144(2,032)

Shareofresultsofasociates

.

—(148)(2,131)164(1,502)

(Los)/profitbeforetax

.

(176,940)(56,159)159,26445,5135,360

Incometaxcredit

.

1,25810,43919,7615873,158

(Los)/profitfortheyear/period

.

(175,682)(45,720)179,02546,1008,518

Othercomprehensiveincomeforthe

year/period

.

Itemsthatmaybereclasifiedsubsequently

toprofitorlos:

Exchangediferencesarisingfromtranslation

oforeignoperations

.

212(1,722)(2,522)(1,119)1,790

Totalcomprehensiveincomeforthe

year/period

.

(175,470)(47,442)176,50344,98110,308

Non-IFRSFinancialMeasure

Tosuplementourconsolidatedfinancialstatements,whicharepresentedinacordancewith

IFRS,wealsouseadjustednet(los)/profit(non-IFRSmeasure)andadjustedEBITDA(non-IFRS

measure)asaditionalfinancialmeasure,whicharenotrequiredby,orpresentedinacordance

with,IFRS.Webelievethesenon-IFRSmeasuresfacilitatecomparisonsofoperatingperformance

fromyeartoyearandcompanytocompanybyeliminatingpotentialimpactsofcertainitems.

FINANCIALINFORMATION

---

Webelievethesemeasuresprovideusefulinformationtoinvestorsandothersin

understandingandevaluatingourconsolidatedouresultsofoperationsinthesamemanerasthey

helpourmanagement.However,suchnon-IFRSfinancialmeasuresthatwepresentedmaynotbe

directlycomparabletosimilarmeasurespresentedbyothercompanies.Theuseofthesenon-IFRS

measureshaslimitationsasananalyticaltol,andshouldnotbeconsideredinisolationfrom,oras

substituteforanalysisof,ouresultsofoperationsorfinancialconditionasreportedunderIFRS.

Inadition,thenon-IFRSmeasuresmaybedefinediferentlyfromsimilartermsusedbyother

companies.

Wedefineadjustednetlos/profit(non-IFRSmeasure)fortheperiodasnetlosforthe

periodadjustedbyadingback:share-basedcompensationexpenses.Thefolowingtable

reconcilesouradjustednet(los)/profit(non-IFRSmeasure)andadjustedEBITDA(non-IFRS

measure),fromour(los)/profitfortheperiodinacordancewithIFRSindicatedfor2022,2023,

2024andthethremonthsendedMarch31,2024and2025:

YearendedDecember31,ThremonthsendedMarch31,

(RMBinthousands)

(unaudited)

Reconciliationof(los)/profitforthe

year/periodtoadjusted(los)/profitfor

theyear/period(non-IFRSmeasure):

(Los)/profitfortheyear/period

.

(175,682)(45,720)179,02546,1008,518

Ad:

—Share-basedcompensationexpenses

(1)

.

—10,209—5,194

Adjustednet(los)/profit(non-IFRS

measure)

.

(175,682)(45,720)189,23446,10013,712

Ad:

Interestexpenses

.

1272178,3351535,953

Depreciationandamortization

.

146,108226,754358,42385,67694,063

Incometaxespaid

.

—2904,8671,4372,956

Les:

Interestincomefrombankdeposits

.

(18,262)(15,437)(14,239)(3,297)(3,921)

Incometaxedrefunded

.

(709)—

AdjustedEBITDA(non-IFRSmeasure)

.

(48,418)166,104546,620130,069112,763

Note:

(1)Share-basedpaymentsrelatetothenon-cashemployebenefitexpensesincuredinconectionwithourawardsto

managementandkeyemployes.

FINANCIALINFORMATION

---

PriortotheTrackRecordPeriodandasofJanuary1,2022,wehadanacumulatedlosof

RMB76.2milion,mainlyduetotheacumulatedlosasofDecember31,2020andthesignificant

netlosin2020,whichwasmainlyatributabletothesignificantshare-basedpaymentsexpenses

inthesameyear.

Werecordedanetlosandanadjustednetlos(non-IFRSmeasure)ofRMB175.7milionin

2022,primarilydueto(i)thegroslosincuredthisyear,resultingfromthetemporary

constraintsonproductioncapacityandactualproductioncausedbyadjustmentstoproductionline

procesesduringtheinitialphaseofourproductportfolioadjustment,and(i)increased

administrativexpensesandR&Dexpensestosuportourbusinesgrowth.

Ournetlosandadjustednetlos(non-IFRSmeasure)narowedtoRMB45.7milionin

2023,primarilyduetoagrosprofitofRMB182.0milionin2023,mainlyatributabletothe

gradualtransitionfromprimarilyproducingsemi-insulatingSiCsemiconductormaterialto

primarilyproducingconductiveSiCsemiconductormaterialandthereleaseofproductioncapacity,

partialyofsetbyincreasedadministrativexpensesandR&Dexpensestosuportourbusines

growth.

In2024,weturnedaroundourlos-makingpositionwithanetprofitofRMB179.0milion

andanadjustednetprofit(non-IFRSmeasure)ofRMB189.2milion,primarilyduetour

improvementingrosprofitmarginonbothconductiveandsemi-insulatingSiCsemiconductor

materialsresultingfromeconomiesofscaleandthecontinuedreleaseofproductioncapacityatour

Shanghaiproductionplant,benefitingfromitsramp-up,leadingtoloweraveragecostsonproducts

sold,partialyofsetbyincreasedoperatingexpenses,includingselingexpenses,administrative

expensesandR&Dexpenses.

OurnetprofitdecreasedfromRMB46.1milioninthethremonthsendedMarch31,2024to

RMB8.5milioninthesameperiodof2025.Ouradjustednetprofit(non-IFRSmeasure)decreased

fromRMB46.1milioninthethremonthsendedMarch31,2024toRMB13.7milioninthesame

periodof2025.Thedecreaseswereprimarilydueto(i)anincreaseinR&Dexpenses,mainly

resultingfrom(a)relativelylowerR&Dexpenses,particularlyfortestingmaterials,recordedin

thethremonthsendedMarch31,2024,and(b)increasedinvestmentinlarge-diameterSiC

substratesandintheaplicationofSiCsubstratesinemergingmarkets,suchasARglases,inthe

sameperiodin2025,and(i)anincreaseinadministrativexpenses,mainlyresultingfrom(a)

higherdepreciationandamortizationinrelationtofixedasetsusedforadministrativepurposes,

and(b)increasedprofesionalservicexpenses,mainlyconsultingfesinrelationtourplant

constructionandoverseasinvestment.

Se“Period-To-PeriodComparisonofResultsofOperations.”

FINANCIALINFORMATION

---

DESCRIPTIONOFKEYCOMPONENTSOFOURESULTSOFOPERATIONS

Revenue

DuringtheTrackRecordPeriod,weprimarilyderivedrevenuefromsalesof(i)SiC

semiconductormaterial,includingconductiveSiCsemiconductormaterialandsemi-insulatingSiC

semiconductormaterial,and(i)others.Forsalesofgodsandprovisionofservicesmadetour

customers,wegeneralyrecognizerevenuewhenourproductsorserviceshavebendeliveredto

andaceptedbyourcustomers.

RevenuebyProductType

DuringtheTrackRecordPeriod,wemainlyderivedourevenuefromsalesofconductiveSiC

semiconductormaterialandsemi-insulatingSiCsemiconductormaterial.Thefolowingtablesets

forthourevenuebreakdownbyproductypeinabsoluteamountandasapercentageofourtotal

revenue,fortheperiodsindicated:

YearendedDecember31,ThremonthsendedMarch31,

Amount%Amount%Amount%Amount%Amount%

(RMBinthousands,exceptforpercentages)

(unaudited)

SalesofSiCsemiconductor

material

ConductiveSiCsemiconductor

material

.

168,32840.4977,62478.21,340,72775.8304,37571.4259,06463.5

Semi-insulatingSiC

semiconductormaterial

.

157,69137.8108,1788.6132,9617.528,9506.870,20417.2

Sub-total

.

326,01978.21,085,80286.81,473,68883.3333,32578.2329,26880.7

Others

(1)

.

91,01621.8164,89413.2294,45316.792,74321.878,69319.3

Total

.

417,035100.01,250,696100.01,768,141100.0426,068100.0407,961100.0

Note:

(1)Othersprimarilyinclude(i)otherSiCproductsthatdonotmetsemiconductor-gradespecificationsacordingto

ourinternalclasificationstandards,suchasmoisanitegemstones,whichareprimarilyusedinresearchand

customergodsaplication,and(i)rentalincome.

FINANCIALINFORMATION

---

Thefolowingtablesetsforthabreakdownofoursalesvolumebyproductypeforthe

periodsindicated:

YearendedDecember31,ThremonthsendedMarch31,

Piece%Piece%Piece%Piece%Piece%

ConductiveSiCsemiconductor

material

.

35,35555.4197,04687.1324,23889.877,38490.977,50179.3

Semi-insulatingSiC

semiconductormaterial

.

28,44044.629,25612.936,95310.27,7769.120,22220.7

Total

.

63,795100.0226,302100.0361,191100.085,160100.097,723100.0

Thefolowingtablesetsforthabreakdownofouraveragesalespricebyproductypeforthe

periodindicated:

YearendedDecember31,ThremonthsendedMarch31,

(RMBperpiece)

ConductiveSiCsemiconductormaterial

.

4,7614,9614,135

(1)

3,9333,343

(1)

Semi-insulatingSiCsemiconductormaterial

.

5,5453,698

(2)

3,5983,7233,472

Notes:

(1)AcordingtoFrost&Sulivan,thedecreasesfromRMB4,961perpiecein2023toRMB4,135perpiecein2024

andfromRMB3,933perpieceinthethremonthsendedMarch31,2024toRMB3,343perpieceinthesame

periodof2025wereinlinewiththeindustrytrend.TheindustryaveragesalespriceofconductiveSiC

semiconductormaterialdecreasedfromRMB3.3thousandtoRMB5.3thousandperpiecein2023toRMB2.7

thousandtoRMB4.7thousandperpiecein2024fromRMB2.5thousandtoRMB4.5thousandperpieceinthethre

monthsendedMarch31,2024toRMB2.2thousandtoRMB4.2thousandperpieceinthesameperiodof2025,

primarilyduetoimprovementsinproductioneficiency,intensifiedmarketcompetition,androbustsuply

availability.

(2)AcordingtoFrost&Sulivan,thedecreasefromRMB5,545perpiecein2022toRMB3,698perpiecein2023was

inlinewiththeindustrytrend.Theindustryaveragesalespriceofsemi-insulatingSiCsemiconductormaterial

decreasedfromRMB4.0thousandtoRMB6.2thousandperpiecein2022toRMB3.5thousandtoRMB4.9thousand

perpiecein2023,primarilyduetoimprovementsinproductioneficiency,intensifiedcompetitionandslowing

demandgrowthindownstreamarkets.

FINANCIALINFORMATION

---

Thefolowingtablesetsforthourevenuebreakdownbysubstratesdiameterinabsolute

amountandasapercentageofourtotalrevenuefortheperiodsindicated:

YearendedDecember31,ThremonthsendedMarch31,

Amount

%oftotal

revenueAmount

%oftotal

revenueAmount

%oftotal

revenueAmount

%oftotal

revenueAmount

%oftotal

revenue

(RMBinthousands,exceptforpercentages)

(unaudited)

SalesofSiCsemiconductor

material

4-inchSiCsubstrates

.

153,95236.997,0337.8115,2406.524,2315.752,66812.9

6-inchSiCsubstrates

.

169,87940.7885,03370.8905,05551.2268,01462.9153,80337.7

8-inchSiCsubstrates

.

2600.1101,9228.1452,47825.540,2219.4122,17429.9

OtherdiametersSiCsubstrates

andmaterials

.

1,9280.51,8140.19150.18590.26230.2

Sub-total

.

326,01978.21,085,80286.81,473,68883.3333,32578.2329,26880.7

Others

(1)

.

91,01621.8164,89413.2294,45316.792,74321.878,69319.3

Total

.

417,035100.01,250,696100.01,768,141100.0426,068100.0407,961100.0

Note:

(1)Othersprimarilyinclude(i)otherSiCproductsthatdonotmetsemiconductor-gradespecificationsacordingto

ourinternalclasificationstandards,suchasmoisanitegemstones,whichareprimarilyusedinresearchand

customergodsaplication,and(i)rentalincome.TherevenuefromothersdecreasedfromRMB92.7milionin

thethremonthsendedMarch31,2024toRMB78.7milioninthesameperiodof2025,primarilyduetorelatively

lowersalesvolumeofotherSiCproductsresultingfromenhancedefectcontrolinourcrystalgrowthandsubstrate

procesingtechnologies.

FINANCIALINFORMATION

---

RevenuebyGeographicalLocation

Thefolowingtablesetsforthourevenuebreakdownbygeographicalocation,each

expresedinabsoluteamountandasapercentageofourtotalrevenue,fortheperiodsindicated:

YearendedDecember31,ThremonthsendedMarch31,

Amount%Amount%Amount%Amount%Amount%

(RMBinthousands,exceptforpercentages)

(unaudited)

MainlandChina

(1)

.

364,64187.4836,31666.9922,67452.2282,08866.2212,86252.2

Othercountriesandregions

outsidemainlandChina

.

52,39412.6414,38033.1845,46747.8143,98033.8195,09947.8

Total

.

417,035100.01,250,696100.01,768,141100.0426,068100.0407,961100.0

Note:

(1)RevenuefromainlandChinalsoincludedrentalincome.

ThemainlandChinamarkethasbenafocusinourbusinesdevelopmentsinceinception.

RevenuefromthemainlandChinamarketincreasedfromRMB364.6milionin2022toRMB836.3

milionin2023andincreasedfromRMB836.3milionin2023toRMB922.7milionin2024and

decreasedfromRMB282.1milioninthethremonthsendedMarch31,2024toRMB212.9

milioninthesameperiodof2025,acountingfor87.4%,66.9%,52.2%,66.2%and52.2%ofour

totalrevenueforthesameperiods,respectively.Suchrevenuegrowthreflectedthesucesofour

salesandmarketingstrategiesduringtheTrackRecordPeriod.OurevenuefromainlandChina

decreasedfromRMB282.1milioninthethremonthsendedMarch31,2024toRMB212.9

milioninthesameperiodin2025,primarilyduetoadeclineinsalesvolumetoCustomer9,

whichdropedfromaproximately18.3thousandpiecesinthethremonthsendedMarch31,

2024to4.0thousandpiecesoverthesameperiod.Thisledtoadecreaseinrevenuegenerated

fromCustomer9,fromRMB66.1milioninthethremonthsendedMarch31,2024toRMB15.7

milionoverthesameperiod.

RevenuefromothercountriesandregionsoutsidemainlandChinaincreasedfromRMB52.4

milionin2022toRMB414.4milionin2023andincreasedfromRMB414.4milionin2023to

RMB845.5milionin2024andincreasedfromRMB144.0milioninthethremonthsended

March31,2024toRMB195.1milioninthesameperiodof2025,acountingfor12.6%,33.1%,

47.8%,33.8%and47.8%ofourtotalrevenuefortherespectiveperiods,whichdemonstratesthe

fastexpansionofourbusinesoverseas.

FINANCIALINFORMATION

---

Ourglobalizationstrategyprimarilyfocusesonbuildingstablebusinesrelationshipswith

internationaleadingpowersemiconductordevicecompanies,improvingoverseascustomerservice

throughouroverseasubsidiariesandexpandingourproductioncapacityinSoutheastAsiatomet

thegrowinginternationaldemandforourSiCsubstrates.AsofMarch31,2025,wehad

establishedastrategicglobalpresencewithsalesoperationinJapan,asubsidiaryinGermany

(SICEuropeGmbH)asaservicecentertoprovidequalityservicesandcustomersuporto

EuropeancustomersandaninvestmenthubinSingapore(VisionaryHorizonPte.Ltd)positioned

asourfutureglobalheadquarters.Wearealsoplaningtofurtherextendourglobalfotprintby

setingupaditionalsalesandservicecentersaswelasproductionfacilitiesinoverseasmarkets.

CostofSales

OurcostofsalesrelatestotheproductionofSiCsubstratesproducts.Itmainlycomprises(i)

costsonrawmaterialsfortheproductionofSiCsubstratesproducts,includingcarbonpowder,

siliconpowder,graphiteinsulationmaterials,specialgasesandchemicalmechanicalpolishing

materials,(i)employexpenses,(i)depreciationandamortization,(iv)utility,and(v)others.

OurcostofsalesincreasedthroughoutheTrackRecordPeriod,whichwasmainlyatributableto

theincreaseinthesalesvolumeofourproductsandproductshiftoconductiveSiCsubstrate

product.

Thefolowingtablesetsforthabreakdownofourcostofsalesbynatureinabsoluteamounts

andasapercentageofourtotalcostofsalesfortheperiodsindicated:

YearendedDecember31,ThremonthsendedMarch31,

Amount%Amount%Amount%Amount%Amount%

(RMBinthousands,exceptforpercentages)

(unaudited)

Rawmaterials

.

256,15856.9734,88268.8733,77655.1202,49360.6155,14949.2

Depreciationandamortization

.

90,91820.2120,95811.3254,28819.158,23117.473,10923.2

Employexpenses

.

41,5029.299,4219.3163,51112.335,50710.639,42012.5

Utility

.

39,5438.882,0587.7128,0879.632,9479.933,56910.6

Others

.

21,8664.931,3412.953,0264.05,1441.514,2744.5

Total

.

449,987100.01,068,660100.01,332,688100.0334,322100.0315,521100.0

FINANCIALINFORMATION

---

CostofSalesbyProductType

Thetablebelowsetsforthabreakdownofourcostofsalesbyproductypeinabsolute

amountandasapercentageofourtotalcostofsalesfortheperiodsindicated:

YearendedDecember31,ThremonthsendedMarch31,

Amount%Amount%Amount%Amount%Amount%

(RMBinthousands,exceptforpercentages)

(unaudited)

CostofsalesofSiC

semiconductormaterial

ConductiveSiCsemiconductor

material

.

204,15045.4755,03170.7908,51568.2211,02963.1194,11461.5

Semi-insulatingSiC

semiconductormaterial

.

131,42429.2156,00314.697,5357.328,5528.652,06116.5

Sub-total

.

335,57474.6911,03485.31,006,05075.5239,58171.7246,17578.0

Others

(1)

.

114,41325.4157,62614.7326,63824.594,74128.369,34622.0

Total

.

449,987100.01,068,660100.01,332,688100.0334,322100.0315,521100.0

Note:

(1)OthersprimarilyincludecostofotherSiCproductsthatdonotmetsemiconductor-gradespecificationsacording

tourinternalclasificationstandards,suchasmoisanitegemstones,whichareprimarilyusedinresearchand

customergodsaplication.

FINANCIALINFORMATION

---

GrosProfit/(Los)andGrosMargin

Ourgrosprofit/(los)representsourevenuelesourcostofsales,andourgrosmargin

representsgrosprofit/(los)dividedbyourevenue,expresedasapercentage.Thetablebelow

setsforthabreakdownofourgrosprofit/(los)andgrosmarginbyproductypefortheperiods

indicated:

YearendedDecember31,ThremonthsendedMarch31,

Gros

profit/(los)

Gros

margin

Gros

profit/(los)

Gros

margin

Gros

profit/(los)

Gros

margin

Gros

profit/(los)

Gros

margin

Gros

profit/(los)

Gros

margin

(RMBinthousands,exceptforpercentages)

(unaudited)

SalesofSiCsemiconductor

material

ConductiveSiCsemiconductor

material

(2)

.

(35,822)(21.3)222,59322.8432,21232.293,34630.764,95025.1

Semi-insulatingSiC

semiconductormaterial

.

26,26716.7(47,825)(44.2)35,42626.63981.418,14325.8

Sub-total

.

(9,555)(2.9)174,76816.1467,63831.793,74428.183,09325.2

Others

(1)

.

(23,397)(25.7)7,2684.4(32,185)(10.9)(1,998)(2.2)9,34711.9

Total

.

(32,952)(7.9)182,03614.6435,45324.691,74621.592,44022.7

Notes:

(1)Othersprimarilyincludegrosprofit/(los)andgrosmarginofotherSiCproductsthatdonotmet

semiconductor-gradespecificationsacordingtourinternalclasificationstandards,suchasmoisanitegemstones,

whichareprimarilyusedinresearchandcustomergodsaplication.

(2)AcordingtoFrost&Sulivan,conductiveSiCsubstratestypicalyachievehighergrosmarginsthan

semi-insulatingSiCsubstratesduetothefolowingkeydrivers:(i)conductiveSiCsubstratesareprimarilyusedin

powerdevices,whichbenefitfromstrongdemandgrowthdrivenbyelectricvehicles,renewablenergy,and

industrialaplications,resultinginstrongerbargainingpowercomparedtosemi-insulatingSiCsubstrates.The

latermainlyservesnicheradiofrequency(“RF”)aplications,suchastelecomunicationsbasestations,where

demandisrelativelylowandconcentratedamongafewkeycustomers;and(i)economiesofscale,aspower

devicedemandoutpacesRFdemand,optimizingtheamortizationofixedcosts.

FINANCIALINFORMATION

---

OurgroslosamountedtoRMB33.0milionin2022whereasourgrosprofitamountedto

RMB182.0milionin2023,andourgrosprofitamountedtoRMB435.5milionin2024.Our

grosprofitamountedtoRMB91.7milionandRMB92.4milioninthethremonthsendedMarch

31,2024and2025,respectively.Ourgroslosmarginwas7.9%in2022andgrosprofitmargin

was14.6%in2023,andfurtherwehadgrosprofitmarginof24.6%in2024.Ourgrosprofit

marginwas21.5%and22.7%inthethremonthsendedMarch31,2024and2025,respectively.

OurgrosmarginfromothersexperiencedsignificantfluctuationsduringtheTrackRecord

Period,rangingfromagroslosmarginof25.7%in2022toagrosprofitmarginof4.4%in

2023,andthentoagroslosmarginof10.9%in2024.Werecordedgroslosmarginof2.2%

fromothersinthethremonthsendedMarch31,2024andgrosprofitmarginof11.9%from

othersinthesameperiodof2025.Thesefluctuationswereprimarilyafectedbychangesinthe

averagesalespriceofmoisanitegemstonesfrom2022to2024,which,acordingtoFrost&

Sulivan,areinlinewithindustrytrends.

Se“—Period-to-PeriodComparisonofResultsofOperations.”

OtherIncome

Ourotherincomeprimarilyconsistsofnetgainondisposalofwastematerials,andamounted

toRMB2.1milion,RMB0.5milion,RMB0.6milion,RMB37thousandandRMB0.2milionin

2022,2023,2024andthethremonthsendedMarch31,2024and2025,respectively.

OtherGainsandLoses,Net

Ourothergainsandloses,netconsistofgovernmentgrantsandothers,netforeignexchange

(los)/gain,(los)/gainondisposalofproperty,plantandequipment,gainonearlyterminationof

leasesandVATinputaxdeduction,amountedtoRMB51.5milion,RMB54.9milion,RMB88.9

milion,RMB23.7milionandRMB18.0milionin2022,2023,2024andthethremonthsended

March31,2024and2025,respectively.

NetInvestmentIncome/(Expense)

Ournetinvestmentincome/(expense)consistsofchangeinfairvalueofinancialasetsat

FVTPL,andamountedtoincomeofRMB36.2milion,RMB23.3milion,RMB0.8milion,

RMB0.9milionandexpenseofRMB0.2milionin2022,2023,2024andthethremonthsended

March31,2024and2025,respectively.

FINANCIALINFORMATION

---

Reversal/(Provision)ofImpairmentLosesonFinancialAsets

Oureversal/(provision)ofimpairmentlosesonfinancialasetsrepresentsimpairmentloses

underECLmodel,netofreversal,consistingoftradeandbilsreceivablesandothereceivables.

WerecordedreversalofimpairmentlosesonfinancialasetsamountingtoRMB1.1milionin

2022,andprovisionofimpairmentlosesonfinancialasetsofRMB11.0milionin2023and

provisionofimpairmentlosesonfinancialasetsofRMB10.2milionin2024,respectively.We

recordedprovisionofimpairmentlosesonfinancialasetsofRMB2.8milionandreversalof

impairmentlosesonfinancialasetsofRMB1.0milioninthethremonthsendedMarch31,

2024and2025,respectively.

SelingExpenses

Ourselingexpensesconsistof(i)employexpenses,(i)operatingexpenses,which

primarilyrepresentbusinespromotionexpensesandmarketingexpenses,(i)oficexpensesand

(iv)others.

Thefolowingtablesetsforththecomponentsofourselingexpensesfortheperiods

indicated:

YearendedDecember31,ThremonthsendedMarch31,

RMB%RMB%RMB%RMB%RMB%

(RMBinthousands,exceptforpercentages)

(unaudited)

Employexpenses

.

4,11029.58,82243.210,77437.42,45660.52,37244.7

Operatingexpenses

.

9,50668.210,53951.616,26456.41,43035.22,55248.1

Oficexpenses

.

1391.06223.04261.5541.3601.1

Others

(1)

.

1761.34442.21,3634.71173.03176.1

Total

.

13,931100.020,427100.028,827100.04,057100.05,301100.0

Note:

(1)Othersprimarilyincludetravelingexpenses,depreciationandamortization.

FINANCIALINFORMATION

---

AdministrativeExpenses

Ouradministrativexpensesconsistof(i)employexpenses,whichprimarilyincluded

salaries,bonuses,socialsecurityinsuranceandprovidentfundstotheadministrativeteam,(i)

depreciationandamortization,(i)profesionalservicexpenses,(iv)taxesandsurcharges,(v)

oficexpenses,(vi)leasexpensesand(vi)others.

Thefolowingtablesetsforthabreakdownofthecomponentsofouradministrativexpenses

fortheperiodsindicated:

YearendedDecember31,ThremonthsendedMarch31,

RMB%oftotalRMB%oftotalRMB%oftotalRMB%oftotalRMB%oftotal

(RMBinthousands,exceptforpercentages)

(unaudited)

Employexpenses

.

56,33950.578,12547.880,80342.721,30947.320,66239.5

Depreciationandamortization

.

20,12218.029,11017.846,87224.79,81621.813,25225.3

Profesionalservicexpenses

.

10,1859.115,4439.521,11711.13,6008.09,61018.4

Taxesandsurcharges

.

4,9864.57,7354.712,5516.62,5615.73,3696.4

Oficexpenses

.

9,1368.212,2867.516,2488.63,4177.63,8477.4

Leasexpenses

.

2400.25,2203.21,6660.92140.5—

Others

(1)

.

10,5239.515,3769.510,1815.44,1309.11,5433.0

Total

.

111,531100.0163,295100.0189,438100.045,047100.052,283100.0

Note:

(1)Othersprimarilyincludeinsurancexpenses,entertainmentexpenseandutilities.

R&DExpenses

OurR&Dexpenses(i)testingmaterialsexpenses,(i)employebenefitexpenses,which

primarilyincludedsalaries,bonuses,socialsecurityinsuranceandprovidentfundstotheR&D

team,(i)utilityexpenses,(iv)depreciationandamortizationand(v)others.

FINANCIALINFORMATION

---

ThefolowingtablesetsforthabreakdownofourR&Dexpensesbynaturefortheperiods

indicated:

YearendedDecember31,ThremonthsendedMarch31,

RMB%RMB%RMB%RMB%RMB%

(RMBinthousands,exceptforpercentages)

(unaudited)

Testingmaterialsexpenses

.

91,22571.593,22367.992,82965.515,93371.535,95980.0

Employebenefitexpenses

.

12,2699.622,48016.422,32015.72,68112.04,0289.0

Utilityexpenses

.

8,8126.96,7884.99,1826.51,3015.81,8894.2

Depreciationandamortization

.

11,9029.39,6007.08,9386.31,2175.51,9094.2

Others

(1)

.

3,3522.75,1193.88,5766.11,1515.21,1532.6

Total

.

127,560100.0137,210100.0141,845100.022,283100.044,938100.0

Note:

(1)Othersprimarilyincludetechnologicalservicesexpenses,engineringtestingexpenses,andpatent-relatedexpenses.

FinanceIncome/(Expense),Net

Ourfinanceincome/(expense),netconsistsof(i)interestincome,(i)interestfrombank

borowings,and(i)interestonleaseliabilities.Thefolowingtablesetsforthabreakdownofthe

componentsofourfinanceincome/(expense)fortheperiodsindicated:

YearendedDecember31,ThremonthsendedMarch31,

RMB%oftotalRMB%oftotalRMB%oftotalRMB%oftotalRMB%oftotal

(RMBinthousands,exceptforpercentages)

(unaudited)

Interestincome

.

18,262100.715,437101.414,239241.23,297104.93,921(193.0)

Interestfrombankborowings

.

—(3)(0.0)(7,942)(134.5)(22)(0.7)(5,914)291.1

Interestonleaseliabilities

.

(127)(0.7)(214)(1.4)(393)(6.7)(131)(4.2)(39)1.9

Total

.

18,135100.015,220100.05,904100.03,144100.0(2,032)100.0

FINANCIALINFORMATION

---

Shareofresultsofasociates

WerecognisedashareoflosofRMB0.1milion,RMB2.1milionandRMB1.5milionin

2023,2024andthethremonthsendedMarch31,2025,respectively,asweinvestedinSuzhou

DaboNewMaterialsTechnologyCo.,Ltd.in2023,whichrecordedlosin2023,2024andthe

thremonthsendedMarch31,2025.WerecognisedashareofprofitofRMB0.2milioninthe

thremonthsendedMarch31,2024,primarilyduetoprofitrecordedbytheaforementioned

asociateinthesameperiod.

IncomeTaxCredit

OurincometaxcreditwasRMB1.3milion,RMB10.4milion,RMB19.8milion,RMB0.6

milionandRMB3.2milionin2022,2023,2024andthethremonthsendedMarch31,2024and

2025,respectively.

UndertheLawofthePRConEnterpriseIncomeTax(the“EITLaw”)andImplementation

RegulationoftheEITLaw,thestandardEITrateofthePRCsubsidiariesis25%.ForthePRC

subsidiariesaprovedas“HighandNewTechnologyEnterprise”bytherelevantgovernment

authorities,theyaresubjectoapreferentialrateof15%.ForthePRCsubsidiariesaprovedas

“MicroandSmalEnterprise”bytherelevantgovernmentauthorities,whichtheanualtaxable

incomethatisnotmorethanRMB1,000,000shalbeincludedinitstaxableincomeathereduced

rateof12.5%foryearendedDecember31,2022andathereducedrateof25%foryearended

December31,2023to2027,withtheaplicablenterpriseincometaxrateof20%.

OurentitiesincorporatedinHongKongaresubjectoHongKongprofitstaxatarateof

16.5%onthestimatedasesableprofitsfortheyearsendedDecember31,2022,2023,2024and

thremonthsendedMarch31,2025.OnMarch21,2018,theHongKongLegislativeCouncil

pasedtheInlandRevenue(Amendment)(No.7)Bil2017(the“Bil”)whichintroducesthe

two-tieredprofitstaxratesregime.TheBilwasignedintolawonMarch28,2018andwas

gazeteonthefolowingday.Underthetwo-tieredprofitstaxratesregime,thefirstHK$2,000,000

ofprofitsofqualifyingcorporationswilbetaxedat8.25%,andprofitsaboveHK$2,000,000wil

betaxedat16.5%.

Taxationarisingfromotherjurisdictionsiscalculatedatherateprevailingintherelevant

jurisdictions.

AsoftheLatestPracticableDate,wedidnothaveanymaterialdisputewithanytax

authority.

FINANCIALINFORMATION

---

Profit/(los)fortheYear/Period

Asaresultoftheforegoing,werecordnetlosofRMB175.7milionandRMB45.7milion

in2022and2023andnetprofitofRMB179.0milion,RMB46.1milionandRMB8.5milionin

2024andthethremonthsendedMarch31,2024and2025,respectively.

PERIOD-TO-PERIODCOMPARISONOFRESULTSOFOPERATIONS

ThremonthsendedMarch31,2025comparedwithThremonthsendedMarch31,2024

Revenue

Ourevenuedecreasedby4.2%fromRMB426.1milioninthethremonthsendedMarch31,

2024toRMB408.0milioninthesameperiodof2025.Specificaly,ourevenuefromsalesof

siliconcarbidesemiconductormaterialremainedrelativelystableatRMB333.3milionand

RMB329.3milion,respectively,forthethremonthsendedMarch31,2024and2025.

OurevenuegeneratedfromsalesofconductiveSiCsemiconductormaterialdecreasedfrom

RMB304.4milionforthethremonthsendedMarch31,2024toRMB259.1milionforthesame

periodin2025primarilyduetothedecreasedaveragesalesprice,whichalignedwithindustry

trendsacordingtoFrost&Sulivan.Ourevenuegeneratedfromsalesofsemi-insulatingSiC

semiconductormaterialincreasedfromRMB29.0milionforthethremonthsendedMarch31,

2024toRMB70.2milionforthesameperiodin2025,primarilyduetotheincreasedpurchase

volumesfromCustomer3andCustomer11asaresultoftheirisingdemandforadiofrequency

electronicomponents.

CostofSales

Ourcostofsalesdecreasedby5.6%fromRMB334.3milioninthethremonthsended

March31,2024toRMB315.5milioninthesameperiodof2025.Specificaly,ourcostofsalesof

salesofsiliconcarbidesemiconductormaterialremainedrelativelystableatRMB239.6milion

andRMB246.2milion,respectively,forthethremonthsendedMarch31,2024and2025.

GrosProfitandGrosProfitMargin

OurgrosprofitremainedrelativelystableatRMB91.7milionforthethremonthsended

March31,2024andRMB92.4milionforthesameperiodin2025.Ourgrosprofitmargin

increasedfrom21.5%forthethremonthsendedMarch31,2024to22.7%forthesameperiodin

2025.

FINANCIALINFORMATION

---

Ourgrosprofitmarginforsalesofsiliconcarbidesemiconductormaterialdecreasedfrom

28.1%forthethremonthsendedMarch31,2024to25.2%forthesameperiodin2025.Our

grosprofitmarginfromsalesofconductiveSiCsemiconductormaterialdecreasedfrom30.7%for

thethremonthsendedMarch31,2024to25.1%forthesameperiodin2025,primarilyduetothe

decreasedaveragesalesprice,whichalignedwithindustrytrendsacordingtoFrost&Sulivan.

Ourgrosprofitmarginfromsalesofsemi-insulatingSiCsemiconductormaterialincreasedfrom

1.4%forthethremonthsendedMarch31,2024to25.8%forthesameperiodin2025,primarily

dueto(i)therelativelyhigheraveragecostofsalesforinventoriesasofDecember31,2023,

whichelevatedtheaveragecostofsalesinthethremonthsendedMarch31,2024underthe

weightedaveragecostmethod,and(i)theimprovementinaveragecostofsaleswiththe

advancementofproductiontechnologies,suchascrystalgrowthandsubstrateprocesing

technologies,includingincreasedslicinglengthofSiCcrystalingotandreprocesingandrecycling

ofspentpolishingmaterials.

OtherIncome

OurotherincomeamountedtoRMB37thousandandRMB0.2milioninthethremonths

endedMarch31,2024and2025,respectively.

OtherGainsandLoses,Net

Ourothergains,net,decreasedfromRMB23.7milioninthethremonthsendedMarch31,

2024,toRMB18.0milioninthethremonthsendedMarch31,2025,primarilybecausewewere

notentitledtoaVATinputaxdeductionduringthethremonthsendedMarch31,2025.

NetInvestmentIncome/(Expense)

WerecordednetinvestmentexpenseofRMB0.2milioninthethremonthsendedMarch31,

2025comparedtonetinvestmentincomeofRMB0.9milioninthethremonthsendedMarch31,

2024,primarilyduetolosinfairvalueofinancialasetsatFVTPLinrelationtourlongterm

equityinvestment.

Reversal/(Provision)ofImpairmentLosesonFinancialAsets

WerecordedprovisionofimpairmentlosesonfinancialasetsofRMB2.8milioninthe

thremonthsendedMarch31,2024,ascomparedtoreversalofimpairmentlosesonfinancial

asetsofRMB1.0milioninthethremonthsendedMarch31,2025,primarilyduetothedecrease

ofourtradereceivablesandothereceivables.

FINANCIALINFORMATION

---

SelingExpenses

Ourselingexpensesincreasedby29.3%fromRMB4.1milionforthethremonthsended

March31,2024toRMB5.3milionforthesameperiodin2025,primarilyduetoanincreasein

operatingexpensesmainlyresultingfromincreasedsamplefestonewcustomersorfornew

productpromotion.

AdministrativeExpenses

Ouradministrativexpensesincreasedby16.2%fromRMB45.0milionforthethremonths

endedMarch31,2024toRMB52.3milionforthesameperiodin2025,primarilydueto(i)an

increaseindepreciationandamortizationinrelationtofixedasetsusedforadministrative

purposes,and(i)anincreaseinprofesionalservicexpenses,mainlyincludingconsultingfesin

relationtourplantconstructionandoverseasinvestment.

R&DExpenses

OuresearchandevelopmentexpensesincreasedfromRMB22.3milionforthethre

monthsendedMarch31,2024toRMB44.9milionforthesameperiodin2025,primarilydueto

(i)relativelylowerR&Dexpenses,particularlyfortestingmaterials,recordedforthethremonths

endedMarch31,2024,and(i)increasedinvestmentinlarge-diameterSiCsubstratesandinthe

aplicationofSiCsubstratesinemergingmarkets,suchasARglases,forthesameperiodin

2025.OurR&Dexpensesasapercentageofrevenuewere5.2%and11.0%forthethremonths

endedMarch31,2024and2025,respectively.

FinanceIncome/(Expense),Net

WerecordednetfinancexpenseofRMB2.0milioninthethremonthsendedMarch31,

2025,comparedtonetfinanceincomeofRMB3.1milioninthesameperiodof2024,primarily

duetoincreasedborowings.

ShareofResultsofAsociates

WerecordedshareoflosofasociateofRMB1.5milioninthethremonthsendedMarch

31,2025,ascomparedtoshareofprofitofasociatesofRMB0.2milioninthesameperiodof

2024,primarilybecauseweinvestedinSuzhouDaboNewMaterialsTechnologyCo.,Ltd.,which

recordedalosinthesameperiodof2025.

FINANCIALINFORMATION

---

Incometaxcredit

OurincometaxcreditincreasedfromRMB0.6milioninthethremonthsendedMarch31,

2024toRMB3.2milioninthesameperiodof2025,primarilyduetotheincreaseindeferedtax

asetsmainlyinrelationtourintergroupunrealisedprofits.

ProfitforthePeriod

Asaresultoftheforegoing,ourprofitfortheperiodecreasedby81.6%fromRMB46.1

milioninthethremonthsendedMarch31,2024toRMB8.5milioninthesameperiod2025.

YearEndedDecember31,2024ComparedtoYearEndedDecember31,2023

Revenue

Ourtotalrevenueincreasedby41.4%fromRMB1,250.7milionin2023toRMB1,768.1

milionin2024,primarilyduetotheincreasedsalesvolumeofconductiveSiCsemiconductor

materialsresultingfrom(i)theincreasedmarketdemand,(i)ourongoingproductportfolio

iterationtopursuehigher-performingproducts,and(i)thexpandedproductioncapacityand

actualproductionthroughproductiontechnologicalinovation.

CostofSales

Ourcostofsalesincreasedby24.7%fromRMB1,068.7milionin2023toRMB1,332.7

milionin2024,primarilydueto(i)anincreaseinthesalesvolumeofourproductsand(i)an

increaseindepreciationandamortizationduringtheramp-uperiodfolowingthecomencement

ofoperationsatourShanghaiproductionplantinMay2023.

GrosProfitandGrosProfitMargin

Asaresultoftheforegoing,ourgrosprofitincreasedby139.2%fromRMB182.0milionin

2023toRMB435.5milionin2024.Ourgrosprofitmarginincreasedfrom14.6%in2023to

24.6%in2024,primarilyduetoimprovementsinthegrosprofitmarginofbothconductiveand

semi-insulatingSiCsemiconductormaterials.

TheimprovementingrosprofitmarginofconductiveSiCsemiconductormaterialwasdueto

economiesofscaleandthecontinuedreleaseofproductioncapacityatourShanghaiproduction

plant,benefitingfromitsramp-upandourinvestmentinproductiontechnologies,suchas

enhancedefectcontrolincrystalgrowth,andsubstrateprocesingtechnologies,including

increasedslicinglengthofSiCcrystalingotandreprocesingandrecyclingofspentpolishing

FINANCIALINFORMATION

---

materials.ThesefortsledtoanincreaseinactualproductionofconductiveSiCsemiconductor

materialfrom220thousandpiecesin2023to372thousandpiecesin2024,andsalesvolumefrom

197thousandpiecesin2023to324thousandpiecesin2024,resultinginloweraveragecosts.

However,suchimprovementwaspartialyofsetbydecreasedaveragesalespricein2024.

Theimprovementingrosmarginofsemi-insulatingSiCsemiconductormaterialwasalso

atributabletourinvestmentinproductiontechnologies,suchasenhancedefectcontrolin

crystalgrowth,andsubstrateprocesingtechnologies,includingincreasedslicinglengthofSiC

crystalingotandreprocesingandrecyclingofspentpolishingmaterials,whichcontributedtoa

loweraveragecostonsemi-insulatingSiCsemiconductormaterialin2024comparedto2023.

OtherIncome

OurotherincomeremainedstableamountingtoRMB0.5milionin2023andRMB0.6

milionin2024.

OtherGainsandLoses,Net

Ourothergains,netincreasedfromRMB54.9milionin2023toRMB88.9milionin2024,

primarilyduetoincreaseinVATinputaxdeductionandgovernmentgrants.

NetInvestmentIncome

Ournetinvestmentincomedecreasedby96.7%fromRMB23.3milionin2023toRMB0.8

milionin2024,primarilyduetowealthmanagementproductwereredemeduponmaturity.

ProvisionofImpairmentLosesonFinancialAsets

OurprovisionofimpairmentlosesonfinancialasetsremainedrelativelystableatRMB11.0

milionin2023andRMB10.2milionin2024.

SelingExpenses

Ourselingexpensesincreasedby41.1%fromRMB20.4milionin2023toRMB28.8milion

in2024,primarilydueto(i)anincreaseinemployexpensesmainlyresultingfromincreased

averagecompensationpaidtoursalesandmarketingstafasanefortoexpandourbusines,

and(i)anincreaseinoperatingexpensesmainlyresultingfromincreasedsamplefestonew

customersorfornewproductpromotion.

FINANCIALINFORMATION

---

AdministrativeExpenses

Ouradministrativexpensesincreasedby16.0%fromRMB163.3milionin2023to

RMB189.4milionin2024,primarilyduetoanincreaseindepreciationandamortizationin

relationtothefixedasetsusedforadministrativepurposes.

R&DExpenses

OurR&Dexpensesincreasedby3.4%fromRMB137.2milionin2023toRMB141.8milion

in2024,primarilybecausewesucesfulytransitionedfromtheinitialR&Dphasetothemas

productionphaseof8-inchSiCsubstratesin2023andourR&Dinvestmentshavestartedto

translateintogrowingcomercialsuces.

FinanceIncome,Net

Ourfinanceincome,netdecreasedby61.2%fromRMB15.2milionin2023toRMB5.9

milionin2024,primarilyduetoaditionofbankborowings.

Shareoflosofasociates

OurshareoflosofasociateincreasedfromRMB0.1milionin2023toRMB2.1milionin

2024,becauseweinvestedinSuzhouDaboNewMaterialsTechnologyCo.,Ltd.,whichrecordeda

losin2023and2024.

Incometaxcredit

WerecordedincometaxcreditofRMB19.8milionin2024comparedtotheincometax

creditofRMB10.4milionin2023,primarilyduetotheincreaseindeferedtaxasetsasaresult

ofourturnaroundfromanetlospositiontoanetprofitpositionin2024,whenwerecordedanet

profitofRMB179.0milion,leadingto(a)recognitionofpreviouslyunrecognizedtaxloses

incuredand(b)theincreaseinutilizationoftaxlosespreviouslynotrecognizedinthesame

year.

Profit/(Los)fortheYear

Asaresultoftheforegoing,ourlosfortheyearacountedforRMB45.7milionin2023

whereasweincuredprofitfortheyearofRMB179.0milionin2024.

FINANCIALINFORMATION

---

YearEndedDecember31,2023ComparedtoYearEndedDecember31,2022

Revenue

Ourtotalrevenueincreasedby199.9%fromRMB417.0milionin2022toRMB1,250.7

milionin2023,primarilyduetotheincreasedsalesvolumeofconductiveSiCsemiconductor

materialsresultingfrom(i)theadjustmentofourproductportfoliotopursuehigher-performing

products,and(i)thexpandedproductioncapacityandactualproductionfolowingthe

comencementofoperationsatourShanghaiproductionplantinMay2023.

CostofSales

Ourcostofsalesincreasedby137.5%fromRMB450.0milionin2022toRMB1,068.7

milionin2023,primarilydueto(i)anincreaseinthesalesvolumeofourproductsand(i)an

increaseindepreciationandamortizationduringtheramp-uperiodfolowingthecomencement

ofoperationsatourShanghaiproductionplantinMay2023.

GrosProfit/(Los)andGrosMargin

Asaresultoftheforegoing,werecordedagroslosofRMB33.0milionin2022anda

grosprofitofRMB182.0milionin2023.Ourgroslosmarginwas7.9%in2022andgros

profitmarginwas14.6%in2023,primarilyduetoimprovementsinthegrosprofitmarginon

conductiveSiCsemiconductormaterialresultingfrom(i)thestrategicadjustmentofourproduct

portfoliofromprimarilyproducingsemi-insulatingSiCsemiconductormaterialtoprimarily

producingconductiveSiCsemiconductormaterial,whichgeneralyhaverelativelyhighergros

profitmargins.ThisadjustmentinitialyledtohigherproductioncostsforconductiveSiC

semiconductormaterialin2022andwaslargelycompletedin2023,and(i)thereleaseof

productioncapacitybenefitingfromourcontinuedinvestmentinproductiontechnologytoimprove

productioneficiency,leadingtoloweraveragecostsofsalesonconductiveSiCsemiconductor

material.

However,theaforementionedimprovementswerepartialyofsetbytheshiftfromagros

profitmarginin2022toagroslosmarginin2023forsemi-insulatingSiCsemiconductor

material,primarilyduetoasignificantdeclineinaveragesalesprice,which,acordingtoFrost&

Sulivan,wasconsistentwiththeindustrytrendofadecreasefromRMB4.0thousandtoRMB6.2

thousandperpiecein2022toRMB3.5thousandtoRMB4.9thousandperpiecein2023.

FINANCIALINFORMATION

---

OtherIncome

OurotherincomeamountedtoRMB2.1milionandRMB0.5milionin2022and2023,

respectively.

OtherGains,Net

Ourothergains,netamountedtoRMB51.5milionandRMB54.9milionin2022and2023,

respectively.

NetInvestmentIncome

Ournetinvestmentincomedecreasedby35.8%fromRMB36.2milionin2022toRMB23.3

milionin2023,primarilybecauseweredemedcertaintransactionalfinancialasetsupon

maturity.

Reversal/(Provision)ofImpairmentLosesonFinancialAsets

WerecordedreversalofimpairmentlosesonfinancialasetsofRMB1.1milionin2022,as

comparedtoprovisionofimpairmentlosesonfinancialasetsofRMB11.0milionin2023,

primarilyduetotheincreaseofourtradereceivablesandothereceivablesasourevenuehas

increasedin2023mainlyatributabletotheincreasedsalesvolumein2023.

SelingExpenses

Ourselingexpenseincreasedby46.6%fromRMB13.9milionin2022toRMB20.4milion

in2023,primarilydueto(i)anincreaseinemployexpenses,whichisinlinewiththexpansion

ofoursalesteamtosuportourbusinesgrowth,and(i)anincreaseinoperatingexpensesmainly

resultingfromincreasedsamplefestonewcustomersorfornewproductpromotion.The

proportionofselingexpensesasapercentageofourevenuedecreasedfrom3.3%in2022to

1.6%in2023,primarilyduetotheincreasedrevenuein2023.

FINANCIALINFORMATION

---

AdministrativeExpenses

Ouradministrativexpensesincreasedby46.4%fromRMB111.5milionin2022to

RMB163.3milionin2023,primarilydueto(i)anincreaseinemployexpenses,asaresultof

theincreasednumberof,andtheincreasedaverageincentivepaidto,ourbusinesoperationsand

administrationstafmainlyresultingfromourbusinesgrowth,and(i)anincreaseindepreciation

andamortizationinrelationtourproductionexpansioninShanghai.Theproportionof

administrativexpensesasapercentageofourevenuedecreasedfrom26.7%in2022to13.1%in

2023,primarilyduetotheincreasedrevenuein2023.

R&DExpenses

OurR&Dexpenseslightlyincreasedby7.6%fromRMB127.6milionin2022toRMB137.2

milionin2023,primarilyduetoanincreaseinemployexpensesasaresultoftheincreased

averageincentivepaidto,andtheincreasednumberof,ourR&DstaftosuportourR&D

activities,demonstratingourconsistentandedicatedR&Defortsthatsuporthexpansionand

inovationofourproducts.TheproportionofR&Dexpensesasapercentageofourevenue

decreasedfrom30.6%in2022to11.0%in2023,primarilyduetotheincreasedrevenuein2023.

FinanceIncome,Net

Ourfinanceincome,netdecreasedby16.1%fromRMB18.1milionin2022toRMB15.2

milionin2023,primarilyduetoadecreaseininterestincomefromadecreaseindepositinterest

rate.

Shareoflosofasociate

WerecognisedashareoflosofRMB0.1milionin2023becauseweinvestedinSuzhou

DaboNewMaterialsTechnologyCo.,Ltd.(苏州达波新材科技有限公司)whichrecordedalosin

thesameyear.

FINANCIALINFORMATION

---

Incometaxcredit

OurincometaxcreditincreasedfromRMB1.3milionin2022toRMB10.4milionin2023,

primarilyduetoanincreaseinoverprovisioninrespectofprioryearesultingfromthe

adjustmentoftheprovisionforincometaxinrelationtothegovernmentgrantswereceivedforthe

investmentintheShanghaiproductionplant,whichisonanon-recuringbasis.

LosfortheYear

Asaresultoftheforegoing,ournetlosfortheyeardecreasedby74.0%fromRMB175.7

milionin2022toRMB45.7milionin2023.

DISCUSIONOFCERTAINKEYBALANCESHETITEMS

Thefolowingtablesetsforthselectedinformationfromourconsolidatedbalanceshetsasof

thedatesindicated,whichavebenextractedfromourconsolidatedfinancialstatementsincluded

inApendixItothisprospectus:

AsofDecember31,

Asof

March31,

(RMBinthousands)

Totalcurentasets

.

3,314,0662,803,8673,124,6533,350,083

Totalnon-curentasets

.

2,539,1604,107,4864,232,0524,198,983

Totalasets

.

5,853,2266,911,3537,356,7057,549,066

Totalcurentliabilities

.

312,9581,303,7441,542,7751,553,198

Totalnon-curentliabilities

.

289,804381,086500,948667,384

Totaliabilities

.

602,7621,684,8302,043,7232,220,582

Netcurentasets

.

3,001,1081,500,1231,581,8781,796,885

Totalequity

.

5,250,4645,226,5135,312,9825,328,484

FINANCIALINFORMATION

---

Thefolowingtablesetsforthourcurentasetsandcurentliabilitiesasofthedates

indicated:

AsofDecember31,

Asof

March31,

Asof

June15,

(RMBinthousands)

(unaudited)

Curentasets:

Tradereceivablesandother

receivables

.

176,337393,175575,837555,783508,939

Prepayment

.

58,719143,54339,06296,82452,645

Inventories

.

533,279843,2771,021,8761,032,8521,173,523

Othercurentasets

.

71,556119,165248,680189,858190,295

Financialasetsatfairvalue

throughprofitorlos

.

1,789,327274,959—

Cashandbankbalances

.

684,8481,029,7481,239,1981,474,7661,468,165

Totalcurentasets

.

3,314,0662,803,8673,124,6533,350,0833,393,567

Curentliabilities:

Tradeandotherpayables

.

231,8761,148,427842,648812,876850,359

Contractliabilities

.

22,36099,31845,15040,24832,380

Borowings

.

—3,150609,263655,742676,603

Taxpayables

.

49,23532,29532,92132,00934,978

Othercurentliabilities

.

8,78320,5098,8329,2458,272

Leaseliabilities

.

704453,9613,0782,862

Totalcurentliabilities

.

312,9581,303,7441,542,7751,553,1981,605,454

Netcurentasets

.

3,001,1081,500,1231,581,8781,796,8851,788,113

OurnetcurentasetsremainedrelativelystableatRMB1,796.9milionasofMarch31,

2025andRMB1,788.1milionasofJune15,2025.

OurnetcurentasetsincreasedfromRMB1,581.9milionasofDecember31,2024to

RMB1,796.9milionasofMarch31,2025,primarilyduetoanincreaseofRMB235.6milionin

cashandbankbalances.

OurnetcurentasetsremainedrelativelystableatRMB1,500.1milionasofDecember31,

2023andRMB1,581.9milionasofDecember31,2024.

FINANCIALINFORMATION

---

OurnetcurentasetsdecreasedfromRMB3,001.1milionasofDecember31,2022to

RMB1,500.1milionasofDecember31,2023,primarilydueto(i)adecreaseofRMB1,514.4

milioninfinancialasetsatfairvaluethroughprofitorlos,and(i)anincreaseofRMB916.6

milionintradeandotherpayables,partialyofsetby(i)anincreaseofRMB344.9milionincash

andbankbalances,(i)anincreaseofRMB310.0milionininventories,and(i)anincreaseof

RMB216.8milionintradereceivablesandothereceivables.

Property,PlantandEquipment

Ourproperty,plantandequipmentprimarilyconsistofpropertyandbuildings,production

equipment,transportationvehicle,electronicequipment,oficequipment,constructioninprogres

andleaseholdimprovements.Ourpropertyandbuildingsprimarilyconsistofourproduction

factory,oficebuildingandstafdormitory.Ourproductionequipmentprimarilyconsistsof

equipmentusedinR&DandproductionofSiCsemiconductorproducts.Ourconstructionin

progresprimarilyconsistofconstructionofourShanghaiproductionplantandR&Dequipment

wepurchased,whichasbendeliveredtousandispendinginstalation.Thefolowingtablesets

forththenetcaryingamountofourproperty,plantandequipmentasofthedatesindicated:

AsofDecember31,

Asof

March31,

(RMBinthousands)

Propertyandbuildings

.

251,8811,422,7281,598,4691,595,254

Productionequipment

.

916,8601,982,7122,001,4871,964,876

Transportationvehicle

.

1,1501,4852,1292,142

Electronicequipment

.

4,9638,92010,4899,102

Oficequipment

.

6512,1062,1882,159

Constructioninprogres

.

1,024,866204,91694,075103,324

Leaseholdimprovements

.

15,34015,94138,33136,123

Total

.

2,215,7113,638,8083,747,1683,712,980

Ourproperty,plantandequipmentincreasedfromRMB2,215.7milionasofDecember31,

2022toRMB3,638.8milionasofDecember31,2023,andfurtherincreasedtoRMB3,747.2

milionasofDecember31,2024,primarilyduetoincreasein(i)propertyandbuildingsthat

finishedconstruction,and(i)productionequipmentprocuredandinstaledin2023.Ourproperty,

plantandequipmentremainedrelativelystableatRMB3,747.2milionasofDecember31,2024

andRMB3,713.0milionasofMarch31,2025.

FINANCIALINFORMATION

---

Inventories

Ourinventoriesprimarilycomprise(i)rawmaterials,(i)workinprogres,and(i)finished

gods.

Thefolowingtablesetsforthabreakdownofourinventoriesasofthedatesindicated:

AsofDecember31,

Asof

March31,

(RMBinthousands)

Rawmaterials

.

296,892404,468497,886490,549

Workinprogres

.

153,470204,709213,339249,027

Finishedgods

.

97,675264,601348,994336,878

Les:write-downofinventories

.

(14,758)(30,501)(38,343)(43,602)

Total

.

533,279843,2771,021,8761,032,852

OurinventoriesincreasedfromRMB533.3milionasofDecember31,2022toRMB843.3

milionasofDecember31,2023,andfurtherincreasedtoRMB1,021.9milionasofDecember31,

2024,primarilyduetotheincreaseinfinishedgodsandrawmaterial,mainlyresultingfromour

stockingupefortsfor(i)productioncapacityexpansion,particularlytoensurethesmoth

comencementofoperationsatourShanghaiproductionplantinMay2023,and(i)preparingto

methedeliverydemandsofseveralindustry-leadingcustomerswebegancolaboratingwithin

2023.OurinventoriesremainedrelativelystableatRMB1,021.9milionasofDecember31,2024

andRMB1,032.9milionasofMarch31,2025.

Write-downofinventoriesisrecordedwhenestimatednetrealizablevalueislesthancost.

Indeterminingwrite-downofinventories,weconsiderfactorsuchas,inventoryaging,forecast

productdemands,historicalpricingtrendsandanticipatedmarketpricesofourproducts.

FINANCIALINFORMATION

---

Thefolowingtablesetsforthanaginganalysisofourinventoriesasofthedatesindicated:

AsofDecember31,

Asof

March31,

(RMBinthousands)

Withinoneyear

.

451,447784,904908,419897,391

Overoneyear

.

96,59088,874151,800179,063

Total

.

548,037873,7781,060,2191,076,454

Les:Write-downofinventories

.

(14,758)(30,501)(38,343)(43,602)

Total

.

533,279843,2771,021,8761,032,852

Wehadanincreasingamountofinventoriesagedlesthanoneyear,primarilybecausewe

increasedinventoryofrawmaterialstometourincreasedproductioncapacitydemand.We

believewehaveacomprehensiveandadequatesysteminplaceforidentifyingandacountingfor

inventoryrisksandimpairmentprovisions.Weregularlyreviewourinventoriesandrecoverability

toidentifyitemswithlowsalesorusagevalueandmakeimpairmentprovisionsacordingly.We

furtherasesinventoriesbasedonthelowerofcostornetrealizablevaluetomakeanyaditional

impairmentprovisions.

Inventoriesarestatedathelowerofcostandnetrealizablevalue.Costsisdeterminedona

weighted-averagebasisand,incaseofworkinprogresandfinishedgods,comprisesdirect

materials,directlabourandanapropriateproportionofoverheads.Netrealizablevalueof

inventoriesisthestimatedselingpriceintheordinarycourseofbusines,lesestimatedcostsof

completionandselingexpenses.Thesestimatesarebasedoncurentmarketconditionsandthe

historicalexperienceofmanufacturingandselingproductsofasimilarnature.Aditionaly,these

estimatescouldchangesignificantlyduetochangesincustomerpreferences,environmentalgoals,

andcompetitoractionsinresponsetoindustrycycles.Wemeasurethesestimatesathendof

eachperiodoftheTrackRecordPeriod:(i)forawmaterials,individualprovisionsaremadewhen

therawmaterialsareidentifiedasunusableorwhentheirealizablevalueislowerthantheir

caryingamount.Wexpecthatherawmaterialswilbeusedupforproductionwithinthe

comingtwoyears,(i)forworkinprogresthatcanbesoldimediately,theaveragesalespricein

thelastmonthoftheperiodended(or,ifnotavailable,thesalespriceinthemostrecentmonth)is

selectedfornetrealizablevalue,andforworkinprogresthatcanotbesoldimediately,we

comparethesalespricesoftheultimateproductsagainsthestimatedcoststobeincuredupto

completion,and(i)forfinishedgods,theaveragesalespriceinthelastmonthoftheperiod

FINANCIALINFORMATION

---

ended(or,ifnotavailable,thesalespriceinthemostrecentmonth)iselectedfornetrealizable

value.Individualprovisionsaremadewhenthefinishedgodsareidentifiedashavingarealizable

valuelowerthantheircaryingamount.

OurDirectorsareoftheviewthatwehavemadesuficientimpairmentprovisionfor

inventoriesduringtheTrackRecordPeriodandwedidnotidentifyanymaterialrecoverability

isueinrespectofourinventoriesagedoveroneyear,forthefolowingreasons:(i)over80%of

ourinventoryagedoveroneyearconsistsofrawmaterials,includingcarbonpowder,silicon

powder,andgraphiteinsulation,whicharehighlystable,resistantoxidationandeterioration,

andhavenoshelf-lifelimitations,(i)theworkinprogresandfinishedgodsagedoveroneyear

primarilyconsistsofconductiveSiCsubstrates.AcordingtoFrost&Sulivan,theglobalmarket

sizeforconductiveSiCsubstratestilhasignificantgrowthpotential,expectedtoexpandfrom

RMB6.6bilionin2024toRMB50.1bilionin2030,representingaCAGRof40.1%,(i)we

recordedrelativelystableinventoryturnoverdaysin2023and2024.

SaveforconductiveSiCsemiconductormaterialandsemi-insulatingSiCsemiconductor

material,ourinventoriesofotherSiCproducts,suchasmoisanitegemstones,amountedto

RMB2.9milion,RMB5.7milion,RMB12.4milionandRMB10.2milionasofDecember31,

2022,2023,2024andMarch31,2025,respectively.TheincreaseininventoriesofotherSiC

productsduringtheTrackRecordPeriodisgeneralyinlinewiththeincreaseinourevenuefrom

othersduringthesameperiod.

WedidnotidentifyanymaterialrecoverabilityisuesforinventoriesofotherSiCproducts

duringtheTrackRecordPeriod,basedonthefolowingreasons:(i)otherSiCproductsmainly

representproductsthatdonotmetsemiconductor-gradespecificationsacordingtourinternal

clasificationstandards,suchasmoisanitegemstones,whichareresistantoxidationand

deteriorationandhavenoshelf-lifelimitations;(i)inacordancewithouraforementioned

impairmentpolicy,wehavemadesuficientimpairmentprovisionsforinventoriesofotherSiC

products,amountingtoRMB1.7milion,RMB4.7milion,RMB4.7milionandRMB3.4milionas

ofDecember31,2022,2023,2024andMarch31,2025,respectively;(i)asofJune15,2025,

RMB4.1milionoraproximately40.4%ofourinventoriesofotherSiCproductsasofMarch31,

2025,hadbensoldorutilized;and(iv)asofJune15,2025,RMB10.8milionor86.8%ofour

inventoriesofotherSiCproductsasofDecember31,2024,hadbensoldorutilized.

FINANCIALINFORMATION

---

Thefolowingtablesetsforthourinventoryturnoverdaysfortheperiodsindicated:

YearEndedDecember31,

Thremonths

ended

March31,

(days)

Inventoryturnoverdays

(1)

.

372.7235.1255.4293.0

Notes:

(1)Inventoryturnoverdaysforaperiodequalstotheaverageofopeningandendinginventoriesbalancedividedby

costofsalesfortherelevantperiodandmultipliedbythenumberofdaysintherelevantperiod,whichis365days

foreachyearand90daysforthethremonthsendedMarch31,2025.

Ourinventoryturnoverdayswereprimarilyafectedbyproductioncycles,customerdelivery

deadlinesandotherelatedfactorsthatwetakeintoconsiderationinensuringtimelysuplyduring

regularproductionproceses.Ourturnoverdaysdecreasedfrom372.7daysin2022to235.1days

in2023,duetourincreasedsales.Ourturnoverdaysfurtherincreasedfrom235.1daysin2023

to255.4daysin2024,primarilyduetoincreasedinventorybalanceof8-inchSiCsubstratesasof

December31,2024,reflectingourefortstostockupinresponsetorisingdemandandtoensure

timelydeliveryoflarge-sizeSiCsubstrateorders.Ourinventoriesturnoverdaysincreasedfrom

255.4daysin2024to293.0daysinthethremonthsendedMarch31,2025,primarilydueto(i)a

relativelylowercostofsalesand(i)atemporaryslowdowninsalesatributabletotheSpring

Festivalholidayduringthesameperiod.Wetakeinventorymanagementmeasurestomakesure

thatweachieveaproduction-to-salesbalancetominimiseinventorybacklogwhilensuringtimely

deliverytocustomers,whichincludelimitingthestockpilingperiodforawmaterials,shortening

productioncyclesandsetingsalestargetswhileasesingthesalescompletionrate.

AsofJune15,2025,RMB386.9milion,oraproximately37.5%ofourinventoriesasof

March31,2025hadbensoldorutilized.

FINANCIALINFORMATION

---

TradeReceivablesandOtherReceivables

Ourtradereceivablesandothereceivablesmainlycomprisetradereceivables,bils

receivablesandothereceivables.Thefolowingtablesetsforthabreakdownofourtrade

receivablesandothereceivablesasofthedatesindicated:

AsofDecember31,

Asof

March31,

(RMBinthousands)

Tradereceivables

—Thirdparties

.

130,402311,808528,327544,507

—Relatedparties

.

14,86313,22719,39113,497

Les:losalowancefortrade

receivables

.

(7,263)(16,252)(27,454)(28,012)

138,002308,783520,264529,992

Bilsreceivables

.

—Comercial

.

14,88755,82048,25220,682

—Bank

.

—8,005317869

Les:losalowanceforbil

receivables

.

(744)(2,791)(2,413)(1,034)

14,14361,03446,15620,517

Othereceivables

—Thirdparties

.

25,46524,5879,3635,002

—Relatedparties

.

—550550

Les:losalowanceforother

receivables

.

(1,273)(1,229)(496)(278)

24,19223,3589,4175,274

Total

.

176,337393,175575,837555,783

FINANCIALINFORMATION

---

OurtradereceivablesandothereceivablesincreasedfromRMB176.3milionasof

December31,2022toRMB393.2milionasofDecember31,2023,andfurtherincreasedto

RMB575.8milionasofDecember31,2024,primarilyasaresultoftheincreaseintrade

receivables,whichisatributabletourstrongsalesgrowth.Ourtradereceivablesandother

receivablesremainedrelativelystableatRMB575.8milionasofDecember31,2024and

RMB555.8milionasofMarch31,2025.

Ourmanagementrecognizeslosalowanceforexpectedcreditlosesontradeandbils

receivablesbasedonanasesmentofthepresentvalueofalexpectedcashshortfalsbetwenthe

contractualandexpectedamounts.Thesestimatesarebasedontheinformationaboutpastevents,

curentconditionsandforecastsofutureconomiconditions.

Inordertoenhancethecolectionoftradereceivables,ourfinanceteamonitorspayments

closelyandpreparesamonthlyagingreportshowingthecustomers’overdueamountsforthe

management’sreview.Oursalesteamalsoevaluatesuchoverdueinvoicesonacase-by-casebasis

andfolowsupwiththecustomerstocolecthetradereceivables.Wegeneralyendeavorto

colectourtradereceivablesthroughfriendlynegotiation,inordertomaintainlongtermbusines

relationshipwiththesecustomers.However,iftheoutstandingtradereceivablesarenotsetled

despitefurthercomunications,wemaytakelegalactionsagainstourcustomerstorecoverthe

balances.

Wegeneralygrantcreditermsrangingfrom60daysto180daystourcustomers.The

folowingtablesetsforthanaginganalysisofourtradereceivablesbasedonrecognitiondateasof

thedatesindicated:

AsofDecember31,

Asof

March31,

(RMBinthousands)

Within90days

.

112,881263,825420,264376,186

91daysto180days

.

15,65835,36579,558107,121

181daystoneyear

.

9,4636,59320,25046,370

Overoneyear

.

—192315

Total

.

138,002308,783520,264529,992

DuringtheTrackRecordPeriod,themajorityofourtradereceivableswerelesthanone

year.Wemaintainedefectivecomunicationwithourcustomers,andnorecoverabilityisuewas

identified.

FINANCIALINFORMATION

---

Thefolowingtablesetsforththeturnoverdaysofourtradereceivablesfortheperiods

indicated:

YearEndedDecember31,

Thremonths

ended

March31,

(days)

Tradereceivableturnoverdays

(1)

.

85.765.285.6115.8

Note:

(1)Tradereceivablesturnoverdaysforaperiodequalstotheaverageofopeningandendingtradereceivablesbalance

dividedbyrevenuefortherelevantperiodandmultipliedbythenumberofdaysintherelevantperiod,whichis

365daysforeachyearand90daysforthethremonthsendedMarch31,2025.

Thetradereceivableturnoverdaysindicatetheaveragetimerequiredforustocolect

payments.Ourtradereceivablesturnoverdaysdecreasedfrom85.7daysin2022to65.2daysin

2023,primarilyasaresultofourenhancedthemanagementoftradereceivables.Ourtrade

receivablesturnoverdaysincreasedfrom65.2daysin2023to85.6daysin2024andfurther

increasedto115.8daysinthethremonthsendedMarch31,2025,primarilybecausewegranted

longercreditermstocustomerswithrelativelystrongercreditrecords,andtheproportionofsuch

customershasgrown.

AsofJune15,2025,RMB275.6milion,oraproximately52.0%ofourtradereceivablesas

ofMarch31,2025hadbensetled.

Webelievethereisnorecoverabilityisueforourtradereceivables,andwehavemade

suficientcreditlosalowancesforourtradereceivablesbasedon(i)ourobustcreditrisk

managementsystem,whichincludescreditevaluationsonacase-by-casebasisandcustomized

creditpolicies,(i)stringentinternalmeasuresthatsuporthefectivecolectionand

managementoftradereceivables.Forexample,receivablescolectionisincorporatedintothe

monthlyperformancevaluationsofoursalesteamandrelevantmanagementpersonel,(i)the

reliabilityandpaymenthistoryofourcustomers,whoareprimarilywel-knowncompaniesinthe

industrywithlong-standingandstablerelationshipswithus,and(iv)ourstrongcustomer

relationshipsandtheconsistentpaymentswereceivedfromcustomers.

FINANCIALINFORMATION

---

FinancialAsetsatFairValuethroughProfitorLos(FVTPL)

DuringtheTrackRecordPeriod,ourfinancialasetsatFVTPLprimarilyconsistofwealth

managementproductsinbanksinthePRC.OurfinancialasetsatFVTPLdecreasedfrom

RMB1,792.1milionasofDecember31,2022toRMB277.1milionasofDecember31,2023,and

subsequentlydecreasedtoRMB2.1milionasofDecember31,2024primarilybecausethe

majorityofthewealthmanagementproductswereredemeduponmaturity.Ourfinancialasetsat

FVTPLremainedrelativelystableatRMB2.1milionasofDecember31,2024andRMB1.9

milionasofMarch31,2025.

DetailsofthefairvaluemeasurementofinancialasetsatFVTPL,particularlythefairvalue

hierarchy,thevaluationtechniquesandkeyinputs,includingsignificantunobservableinputs,and

therelationshipofunobservableinputstofairvaluearedisclosedinNote39totheAcountant’s

ReportinApendixItothisprospectus.UpontheListing,weintendtocontinueourinvestments

strictlyinacordancewithourinternalcontrolpolicy,ArticlesofAsociationand,tothextent

thatsuchinvestmentisanotifiabletransactionunderChapter14oftheListingRules,the

CompanywilcomplywiththerelevantrequirementsunderChapter14oftheListingRules,

includingtheanouncement,reportingand/orshareholders’aprovalrequirements(ifaplicable).

Wemanagedandevaluatedtheperformanceofinvestmentsonafairvaluebasisin

acordancewithourbusinesnedsandinvestmentstrategy.Wendeavortoincreasethereturnof

idlecashandbankbalancesbyplacinginvestmentsinwealthmanagementproductswithigh

liquidityandlowrisksuchthatouriskexposurearisingfromsuchinvestmentsiscontroled.Our

investmentstrategyrelatedtosuchproductsfocusesonminimizingthefinancialrisksby

reasonablyandconservativelymatchingthematuritiesoftheportfoliotoanticipatedoperating

cashneds,whilegeneratingdesirableinvestmentreturns.Inadition,inordertomonitorand

controltheinvestmentrisksasociatedwithourportfolioflow-riskwealthmanagementproducts,

wehaveadoptedacomprehensivesetofinternalpoliciesandguidelinestomanageour

investments.Ourfinancedepartmentisresponsibleforproposing,analyzingandevaluating

potentialinvestmentinsuchproducts.Ourmanagement,includingourfinancedepartment,has

extensivexperienceinmanagingthefinancialaspectsofanenterprise’soperations.Priorto

makinganymaterialinvestmentsinwealthmanagementproductsormodifyingourexisting

investmentportfolio,theproposalsubmitedbythefinancedepartmentshalbereviewedand

aprovedbyourchiefinancialoficer.AcordingtourArticlesofAsociation,suchdecision

doesnotrequireadecisionbytheBoard.Tocontrolouriskexposure,wemakeinvestment

decisionsrelatedtolowriskwealthmanagementproducts,afterthoroughlyconsideringanumber

ofactors,includingbutnotlimitedto,macro-economicenvironment,generalmarketconditions,

riskcontrolandcreditofisuingfinancialinstitutions,ourownworkingcapitalconditions,andthe

expectedprofitorpotentialosoftheinvestment.

FINANCIALINFORMATION

---

TradeandOtherPayables

Tradeandotherpayablesmainlyconsistoftradepayables,bilspayables,otherpayables,

salaryandbonuspayablesandothertaxespayable.Ourtradeandotherpayablesincreasedfrom

RMB231.9milionasofDecember31,2022toRMB1,148.4milionasofDecember31,2023,

primarilyduetotheincreaseoftradepayablesandbilpayables,aswepurchasedmoreraw

materialsandequipmentandnegotiatedforbeterpaymentermswithoursupliersin2023.Our

tradeandotherpayablesfurtherdecreasedtoRMB842.6milionasofDecember31,2024and

furtherdecreasedtoRMB812.9milionasofMarch31,2025,primarilyduetothedecreaseof

tradepayablesandbilpayables,aswecompletedtheconstructionofourShanghaiproduction

plantandgradualymadepaymentfortherelevantpayablesinthisproces.Weintendtosetle

otherpayableduetorelatedpartiesbyListing.

AsofDecember31,

Asof

March31,

(RMBinthousands)

Tradepayables

—Thirdparties

.

185,308702,943616,865504,240

—Relatedparties

.

—492174159

Bilspayables

.

—366,636153,728236,879

Otherpayable

—Thirdparties

.

20,80726,06222,35718,316

—Relatedparties

.

11583125—

—Salaryandbonuspayables

.

21,93447,57643,39449,174

—Othertaxespayable

.

3,7124,6356,0054,108

Total

.

231,8761,148,427842,648812,876

Intermsofpayment,wearegeneralygrantedbyoursupliersacreditermof30daysto90

days.Thefolowingtablesetsforthanaginganalysisofourtradepayablesbasedonthedateof

thegodsandservicesreceivedasofthedatesindicated:

AsofDecember31,

Asof

March31,

(RMBinthousands)

Within90days

.

160,752484,680268,777198,800

91daysto180days

.

16,101185,10027,21664,668

181daystoneyear

.

1,86710,91289,67019,698

Overoneyear

.

6,58822,743231,466221,233

Total

.

185,308703,435617,039504,399

FINANCIALINFORMATION

---

Thefolowingtablesetsforththeturnoverdaysofourtradepayablesfortheperiods

indicated:

YearEndedDecember31,

Thremonths

ended

March31,

(days)

Tradepayablesturnoverdays

(1)

.

96.1151.8180.8159.9

Notes:

(1)Tradepayablesturnoverdaysforaperiodequalstotheopeningandendingtradepayablesbalancedividedbycost

ofsalesfortherelevantperiodandmultipliedbythenumberofdaysintherelevantperiod,whichis365daysfor

eachyearand90daysforthethremonthsendedMarch31,2025.

Ourtradepayablesturnoverdaysincreasedfrom96.1daysin2022to151.8daysin2023,

andthenincreasedto180.8daysin2024.Theincreasedintradepayablesturnoverdaysfrom2022

to2024isprimarilyduetowenegotiatedbeterpaymentermswithoursupliersandincreased

purchases.Ourtradepayablesturnoverdaysdecreasedfrom180.8daysin2024to159.9daysin

thethremonthsendedMarch31,2025,primarilyduetothedecreasedtradepayablesdrivenby

ourongoingsetlementofpaymentsrelatedtothecompletionoftheconstructionofourShanghai

productionplant.

AsofJune15,2025,RMB203.5milion,oraproximately40.4%ofourtradepayablesasof

March31,2025hadbensetled.

ContractLiabilities—CurentPortion

Ourcontractliabilities—curentportionrepresentadvancepaymentsmadebycustomers

whiletheunderlyingodsorservicesareyetobeprovided.Ourcontractliabilities—curent

portionincreasedfromRMB22.4milionasofDecember31,2022toRMB99.3milionasof

December31,2023,primarilyduetoanincreaseinthesalesorderfromourmajorcustomers.Our

contractliabilities—curentportiondecreasefromRMB99.3milionasofDecember31,2023to

RMB45.2milionasofDecember31,2024,primarilyduetothereclasificationofpartofcontract

liabilitiesfromcurentportiontonon-curentportionarisingfromchangesinexpectationoftiming

ondeliveringodtocustomers.Ourcontractliabilities—curentportionremainedrelatively

stableatRMB45.2milionasofDecember31,2024andRMB40.2milionasofMarch31,2025.

AsofJune15,2025,RMB2.5milion,oraproximately3.0%ofthecontractliabilitiesasof

March31,2025hadbensubsequentlyrecognizedasrevenue.

FINANCIALINFORMATION

---

SELECTEDFINANCIALRATIOS

Thefolowingtablesetsforthourkeyfinancialratiosasofandfortheperiodindicated:

Asofandfortheyearended

December31,

Asofandfor

thethre

monthsended

March31,

Revenuegrowthrate

(1)

.

—199.9%41.4%(4.2%)

Grosprofit/(los)margin

(2)

.

(7.9%)14.6%24.6%22.7%

AdjustedEBITDAmargin(non-IFRS

measure)

(3)

.

(11.6%)13.3%30.9%27.6%

Curentratio

(4)

.

10.62.22.02.2

Quickratio

(5)

.

8.91.51.41.5

Debt-to-asetratio

(6)

.

10.3%24.4%27.8%29.4%

Cashconversioncycle

(7)

.

362.3148.5160.2248.9

Notes:

(1)Revenuegrowthrateiscalculatedastheyear-on-yeargrowthrateofrevenueandthegrowthrateofrevenueforthe

thremonthsendedMarch31,2025comparedtothethremonthsendedMarch31,2024.

(2)Grosprofit/(los)marginequalsgrosprofit/(los)fortheperiodividedbyrevenuefortheperiodandmultiplied

by100%.

(3)AdjustedEBITDAmargin(non-IFRSmeasure)equalsadjustedEBITDA(non-IFRSmeasure)dividedbyrevenue

andmultipliedby100%.

(4)Curentratioequalscurentasetsdividedbycurentliabilitiesasoftherelevantperiodend.

(5)Quickratioequalscurentasetsexcludinginventoriesdividedbycurentliabilitiesasoftherelevantperiodend.

(6)Debt-to-AsetRatioequalstotaliabilitiesdividedbytotalasetsmultipliedby100%.

(7)Cashconversioncycleiscalculatedusingtheinventoryturnoverdaysineachperiodplusthetradereceivable

turnoverdaysintherespectiveperiodminusthetradepayablesturnoverdaysintherespectiveperiod.

Curentratio

Ourcurentratiodecreasedfrom10.6asofDecember31,2022to2.2asofDecember31,

2023,primarilydueto(i)adecreaseinourfinancialasetsatfairvaluethroughprofitorlos,

whichwasmainlybecausethemajorityofthewealthmanagementproductswereredemedupon

maturityand(i)anincreaseintradeandotherpayablesmainlyresultingfromanincreaseoftrade

FINANCIALINFORMATION

---

payablesandbilpayables,aswepurchasedmorerawmaterialsandequipmentandnegotiatedfor

beterpaymentermswithoursupliersin2023.Ourcurentratioremainedrelativelystableat

2.2,2.0and2.2asofDecember31,2023,2024andthethremonthsendedMarch31,2025,

respectively.

Quickratio

Ourquickratiodecreasedfrom8.9asofDecember31,2022to1.5asofDecember31,2023,

andsubsequentlyremainedrelativelystableat1.4and1.5in2024andthethremonthsended

March31,2025.Ourquickratiogeneralyfolowedthetrendofourcurentratioandthechanges

wereforthesamereason.

Debt-to-Asetsratio

Ourdebt-to-asetsratioincreasedfrom10.3%asofDecember31,2022to24.4%asof

December31,2023,duetotheincreaseintradepayablesandbilpayablesinrelationtothe

constructionofourShanghaiproductionplantandourawmaterialsandequipmentinlinewith

ourevenuegrowth.Ourdebt-to-asetsratioincreasedfrom24.4%asofDecember31,2023to

27.8%asofDecember31,2024andfurtherincreasedto29.4%inthethremonthsendedMarch

31,2025,primarilyduetoincreasedborowingsasofDecember31,2024andasofMarch31,

2025.

Cashconversioncycle

Ourcashconversioncyclesignificantlydecreasedfrom362.3daysin2022to160.2daysin

2024,primarilydueto(i)thedecreasedinventoryturnoverdays,drivenbyincreasedsales,and(i)

theincreasedtradepayablesturnoverdays,atributabletobeterpaymentermsnegotiatedwith

oursupliersandincreasedpurchases.Ourcashconversioncycleincreasedfrom160.2daysin

2024to248.9daysinthethremonthsendedMarch31,2025,primarilydueto(i)theincreased

inventoryturnoverdays,resultingfromarelativelylowercostofsalesandatemporaryslowdown

insalesduringtheSpringFestivalholiday,and(i)theincreasedtradereceivablesturnoverdaysas

wegrantedlongercreditermstocustomerswithrelativelystrongercreditrecords,andthe

proportionofsuchcustomershasincreased.

LIQUIDITYANDCAPITALRESOURCES

AsofMarch31,2025,wehadRMB1,402.1milionincashandbankbalances.Ourcashand

bankbalancesprimarilyconsistofcashatbanksandonhandunderRMB,USDandJPY

denomination.

FINANCIALINFORMATION

---

OurnetcashusedinoperatingactivitieswasRMB64.4milionandRMB68.1milionin2022

and2023.OurnetcashgeneratedfromoperatingactivitieswasRMB30.4milionandRMB144.0

milionin2024andthethremonthsendedMarch31,2025.

ConsolidatedStatementsofCashFlows

Thefolowingtablesetsforthasumaryofourcashflowsfortheperiodsindicated:

YearEndedDecember31,

Thremonthsended

March31,

(RMBinthousands)

Netcash(usedin)/generatedfromoperating

activities

.

(64,421)(68,110)30,434(81,336)143,965

Netcash(usedin)/generatedfrominvesting

activities

.

(2,774,694)204,570(257,137)88,831(120,034)

Netcashgeneratedfrom/(usedin)financing

activities

.

3,178,744(5,982)571,06440,067219,249

Netincreaseincashandcashequivalents

.

339,629130,478344,36147,562243,180

Cashandcashequivalentsathebegining

oftheyear/period

.

342,586682,492811,593811,5931,155,456

Efectofexchangeratechanges

.

277(1,377)(498)8903,428

Cashandcashequivalentsathendof

theyear/period

.

682,492811,5931,155,456860,0451,402,064

NetCash(Usedin)/GeneratedfromOperatingActivities

Netcashusedinoperatingactivitiesprimarilycomprisesourlosbeforetaxationforthe

periodadjustedby:(i)non-cashandnon-operatingitems,and(i)changesinworkingcapital.

InthethremonthsendedMarch31,2025,ournetcashgeneratedfromoperatingactivities

wasRMB144.0milion.Ournetcashgeneratedfromoperatingactivitiesiscalculatedbyadjusting

ourprofitbeforetaxationofRMB5.4milionbynon-cashandotheritemstoariveatanoperating

profitbeforechangesinworkingcapitalofRMB112.6milion.Ourmovementsinworkingcapital

primarilyreflectadecreaseinothercurentasetsofRMB59.8milion,andadecreaseintrade

andothereceivablesofRMB24.6milion,partialyofsetbyanincreaseinprepaymentsof

RMB59.1milion.

FINANCIALINFORMATION

---

In2024,ournetcashgeneratedfromoperatingactivitieswasRMB30.4milion.Ournetcash

generatedfrominoperatingactivitiesiscalculatedbyadjustingourprofitbeforetaxationof

RMB159.3milionbynon-cashandotheritemstoariveatanoperatingprofitbeforechangesin

workingcapitalofRMB555.5milion.Ourmovementsinworkingcapitalprimarilyreflecta

decreaseinprepaymentsofRMB33.6milion,partialyofsetbyanincreaseininventoriesof

RMB200.6milionandanincreaseintradeandothereceivablesofRMB188.4milion.

In2023,ournetcashusedinoperatingactivitieswasRMB68.1milion.Ournetcashusedin

operatingactivitiesiscalculatedbyadjustingourlosbeforetaxationofRMB56.2milionby

non-cashandotheritemstoariveatanoperatingprofitbeforemovementsinworkingcapitalof

RMB159.2milion.Ourmovementsinworkingcapitalprimarilyreflect(i)anincreaseinrestricted

cashofRMB197.7milion,(i)anincreaseininventoriesofRMB325.7milionand(i)an

increaseintradeandothereceivablesofRMB226.7milion,partialyofsetbyincreaseintrade

andotherpayablesofRMB553.4milion.

In2022,ournetcashusedinoperatingactivitieswasRMB64.4milion.Ournetcashusedin

operatingactivitiesiscalculatedbyadjustingourlosbeforetaxationofRMB176.9milionby

non-cashandotheritemstoariveatanoperatinglosbeforemovementsinworkingcapitalof

RMB77.3milion.Ourmovementsinworkingcapitalprimarilyreflectanincreaseininventories

ofRMB156.7milion,andanincreaseinprepaymentsofRMB46.7milion,partialyofsetbyan

increaseintradeandotherpayablesofRMB137.2milion.

Wehavesucesfulyachievedaturnaroundfromanetoperatingcashoutflowin2022and

2023toanetoperatingcashinflowin2024throughthefolowingstrategicinitiatives:

(i)sustainedrevenuegrowthdrivenbyproductinovation,productionexpansion,and

customerbasegrowthbothinChinandoverseasacrosvariousdownstream

aplications.ThroughoutheTrackRecordPeriod,weprioritizedproductinovationand

upgrades,improvingproductperformance,size,andtypestometevolvingmarket

demandsandstrengthenourcompetitiveposition.Concurently,wexpandedour

productioncapacityofSiCsubstratesfrom75,000piecesin2022to420,000piecesin

2024,achievingaCAGRof136.6%.OurgrowingcustomerbasebothinChinand

overseasacrosvariousdownstreamaplicationsalsosuportedhighersalesvolumes,

withSiCsubstratesalesrisingfrom63,800piecesin2022toaproximately361,200

piecesin2024,reflectingaCAGRof137.9%.Thesefortsdroverevenuegrowthfrom

RMB417.0milionin2022toRMB1,768.1milionin2024,representingaCAGRof

105.9%.

FINANCIALINFORMATION

---

(i)rigorouscostcontrolmeasurestoenhanceficiency.Aswescaledupmasproduction,

weimplementedseveralcostoptimizationinitiatives,including:(a)continuous

technologicalandautomationupgradesatourShanghaiproductionfactoryduringits

ramp-uperiod,whichaveimprovedproductioneficiency;(b)streamliningproduction

procesesandequipmentutilizationtoreducengineringandmaintenance;(c)

simplifyingproductionworkflowstominimizelaborandrawmaterialusage,thereby

loweringmanufacturinglaborandmaterialcosts;and(d)enhancingsourcingeficiency

tofurthereducematerialconsumptionandcosts.Asaresult,ourcostofsalesasa

percentageofrevenuedeclinedfrom107.9%in2022to85.4%in2023andfurtherto

75.4%in2024.

(i)strategicmanagementofoperatingexpensesandworkingcapitaloptimization.We

efectivelymanagedoperatingexpensesbyrefiningpromotionalandmarketing

strategies,advancingtechnologicalcapabilities,andoptimizingteamstructuresand

corporatemanagement.Asourbusinesexpands,wexpectoincreaseprocurement

volumes,enablingustonegotiatemorefavorablesuplierterms.Aditionaly,weplan

toutilizebilspayableandsuplychainfinancingsolutionstoextendpaymentperiods

andimproveworkingcapitaleficiency.Wewilalsointensifyefortstocolectoverdue

tradereceivablesandenhanceinventorymanagementoptimizeproductionplaning

andmaintainarelativelystableordecreasedinventoryturnoverdays.

NetCash(Usedin)/GeneratedfromInvestingActivities

InthethremonthsendedMarch31,2025,ournetcashusedininvestingactivitieswas

RMB120.0milion.Thiswasmainlyatributabletopurchaseofproperty,plantandequipment,

intangibleasetsandright-of-useasetsofRMB121.2milion.

In2024,ournetcashusedininvestingactivitieswasRMB257.1milion.Thiswasmainly

atributabletopurchaseofproperty,plantandequipment,intangibleasetsandright-of-useasets

ofRMB567.9milion,partialyofsetbyredemptionofinancialasetsmeasuredatFVTPLof

RMB275.8milion.

In2023,ournetcashgeneratedfrominvestingactivitieswasRMB204.6milion.Thiswas

mainlyatributabletoredemptionofinancialasetsmeasuredatFVTPLofRMB3,008.3milion,

partialyofsetbypurchaseofproperty,plantandequipment,intangibleasetsandright-of-use

asetsofRMB1,395.2milion.

FINANCIALINFORMATION

---

In2022,ournetcashusedininvestingactivitieswasRMB2,774.7milion.Thiswasmainly

atributableto(i)thepaymentforpurchaseofproperty,plantandequipment,intangibleasetsand

right-of-useasetsofRMB1,034.0milionand(i)investmentinfinancialasetsmeasuredat

FVTPLofRMB2,320.0milion.

NetCashGeneratedfrom/(Usedin)FinancingActivities

InthethremonthsendedMarch31,2025,ournetcashgeneratedfromfinancingactivities

wasRMB219.2milion.Thiswasmainlyatributabletoprocedsfrombankborowingof

RMB325.7milion,partialyofsetbyrepaymentfrombankborowingsofRMB100.0milion.

In2024,ournetcashgeneratedfromfinancingactivitieswasRMB571.1milion,whichwas

mainlyatributabletoprocedsfrombankborowingofRMB700.0milion,partialyofsetby

paymentforepurchaseofsharesofRMB100.2milion.

In2023,ournetcashusedinfinancingactivitieswasRMB6.0milion,whichwasmainly

atributabletoprocedsfrombankborowingsofRMB3.2milion,partialyofsetbyrepaymentof

principalofleaseliabilitiesofRMB7.3milion.

In2022,ournetcashgeneratedfromfinancingactivitieswasRMB3,178.7milion,which

wasmainlyatributabletoprocedsfromisuanceofsharesofRMB3,183.4milion,partialy

ofsetbyrepaymentofprincipalofleaseliabilitiesofRMB4.5milion.

INDEBTEDNES

Thefolowingtablesetsforthabreakdownofourindebtednesasofthedatesindicated:

AsofDecember31,

Asof

March31,

Asof

June15,

(RMBinthousands)

(unaudited)

Bankandotherborowings

.

—3,150695,000920,742856,603

Leaseliabilities

.

3,94815,3963,9613,0782,862

Total

.

3,94818,546698,961923,820859,465

FINANCIALINFORMATION

---

Bankandotherborowings

AsofDecember31,2022,2023,2024,March31andJune15,2025,wehadbankandother

borowingsofnil,RMB3.2milion,RMB695.0milion,RMB920.7milionandRMB856.6

milion,respectively.Thefectiveinterestratesofourborowingsrangedfrom1.4%−3.1%per

anumduringtheTrackRecordPeriod.Weconsidertheseinterestratestobewithintherangeof

marketinterestrates.Weconsiderourbankborowingagrementstocontainstandardterms,

conditionsandcovenantsthatarecustomaryforcomercialbankloans.AsoftheLatest

PracticableDate,wehadunutilizedbankingfacilitiesofRMB2,299.1milion.DuringtheTrack

RecordPeriodanduptotheLatestPracticableDate,wedidnotexperienceanydificultiesin

repayingorenewingbankborowings.

LeaseLiabilities

Leasesareinitialyrecognizedasright-of-useasetsandcorespondingliabilityathedate

whentheleasedasetisavailableforusebyourGroup.AsofDecember31,2022,2023,2024,

March31andJune15,2025,werecognizedtotaleaseliabilities,includingcurentand

non-curentleaseliabilities,ofRMB3.9milion,RMB15.4milion,RMB4.0milion,RMB3.1

milionandRMB2.9milion,respectively.ThetotaleaseliabilitiesincreasedfromRMB3.9

milionasofDecember31,2022toRMB15.4milionasofDecember31,2023,primarilydueto

newapartmentleasesforstafdormitoryuseinShanghain2023.Thetotaleaseliabilitiesfurther

decreasedtoRMB4.0milionasofDecember31,2024primarilyduetothereductioninleased

spaceforemployeacomodations,whichmainlyresultedfromthedecreaseinrotatingstaf

fromothercitiesfolowingthestabilizationofoperationsatourShanghaiproductionplant.The

totaleaseliabilitiesremainedrelativelystableatRMB4.0milion,RMB3.1milionandRMB2.9

milionasofDecember31,2024,March31,2025andJune15,2025.

ContingentLiabilities

AsofDecember31,2022,2023,2024,March31andJune15,2025,wedidnothaveany

significantcontingentliabilities.OurDirectorsconfirmedthatherehadnotbenanymaterial

changeinthecontingentliabilitiesofourCompanysinceMarch31,2025anduptotheLatest

PracticableDate.

IndebtednesStatement

OurDirectorsconfirmthatasoftheLatestPracticableDate,therewasnomaterialcovenant

onanyofouroutstandingdebtandtherewasnobreachofanycovenantduringtheTrackRecord

PeriodanduptotheLatestPracticableDate.OurDirectorsfurtherconfirmthatourGroupdidnot

FINANCIALINFORMATION

---

experienceanydificultyinobtainingbankloansandotherborowings,defaultinpaymentofbank

loansandotherborowingsorbreachofcovenantsduringtheTrackRecordPeriodanduptothe

Dateofthisprospectus.

Exceptasdisclosedabove,asofJune15,2025,beingtheMostRecentPracticableDatefor

determiningourindebtednes,wedidnothaveanyoutstandingmortgages,charges,debentures,

otherisuedebtcapital,bankoverdrafts,borowings,liabilitiesunderaceptanceorothersimilar

indebtednes,hirepurchasecomitments,guarantesorothermaterialcontingentliabilities.Our

DirectorshaveconfirmedthatherehadbenomaterialchangeinourindebtednesinceJune

15,2025anduptotheDateofthisprospectus.

CAPITALEXPENDITURES

Ourcapitalexpenditures,whichcomprisespaymentforproperty,plantandequipment,

intangibleasetsandright-of-useasets,wereRMB1,034.0milion,RMB1,395.2milion,

RMB567.9milion,RMB235.3milionandRMB121.2milionin2022,2023,2024andthethre

monthsendedMarch31,2024and2025,respectively.Intheseyears,ourcapitalexpenditureswere

primarilyusedfortheconstructionofourproductionplant.Se“Busines—OurStrategies—

MaintainingandContinuouslyEnhancingOurProductionCapacitytoImproveProduction

EficiencyandDeliveryQuality”fordetailsofourexpansionplans.Wexpectofinancesuch

capitalexpendituresthroughexistingcashonhand,bankloansandthenetprocedsfromthe

GlobalOfering.Wemayadjustourcapitalexpendituresforanygivenyearacordingtour

developmentplansorinlightofmarketconditionsandotherfactorswebelievetobeapropriate.

CAPITALCOMITMENTS

OurcapitalcomitmentsasofDecember31,2022,2023,2024andasofMarch31,2025,

wereprimarilyrelatedtoproperty,plantandequipment.AsofDecember31,2022,2023,2024and

asofMarch31,2025,thetotalamountofourcapitalexpenditurecontractedforbutnotyet

providedwasRMB14.0milion,RMB345.0milion,RMB126.4milionandRMB134.7milion,

respectively.

FINANCIALRISKDISCLOSURE

OurGroup’sactivitiesexposeitoavarietyofinancialrisks:marketrisk(including

curencyrisk,interestrateriskandpricerisk),creditriskandliquidityrisk.OurGroup’soveral

riskmanagementprogramfocusesontheunpredictabilityofinancialmarketsandseksto

minimizepotentialadversefectsonourGroup’sfinancialperformance.Riskmanagementis

cariedoutbytheseniormanagementofourGroup.

FINANCIALINFORMATION

---

OurmanagementregularlymanagesandmonitorsthefinancialrisksofourGrouptoensure

apropriatemeasuresareimplementedinatimelyandefectivemaner.DuringtheTrackRecord

Period,nohedgingactivitywasundertakenbyourGroup.

MarketRisk

CurencyRisk

SeveralsubsidiariesoftheCompanyhaveforeigncurencysales,capitalexpenditure,cash

andbankbalancesandborowings,whichexposetheGrouptoforeigncurencyrisk.The

subsidiariesaremainlyexposedtoforeigncurencyofUS$,Japaneseyen,andEurodolar.The

Groupcurentlydoesnothaveaforeigncurencyhedgingpolicy.However,themanagement

monitorsforeignexchangexposureandwilconsiderhedgingsignificantforeigncurency

exposureshouldthenedarise.

InterestRateRisk

TheGroupisexposedtofairvalueinterestrateriskinrelationtoitsrestrictedbankdeposits,

loanreceivables,cashandbankbalances,leaseliabilitiesandborowings.Borowingagrements

includeamixofixedandvariablerateloans,thexposureinrelationtofixedrateagrementsis

consideredtobeminimal.TheGroupisalsoexposedtocashflowinterestrateriskinrelationto

variablerateborowings.TheGroup’scashflowinterestrateriskismainlyconcentratedonthe

fluctuationoftheLoanPrimeRate.Forthevariableratebankborowings,theGroupcurently

doesnothaveaninterestratehedgingpolicytomitigateinterestraterisk.Nevertheles,

managementmonitorsinterestratexposureandwilconsiderhedgingsignificantinterestraterisk

shouldthenedarise.

PriceRisk

TheGroupisexposedtoequitypriceriskthroughitsfinancialinvestmentsatFVTPL.Se

Note23totheAcountant’sReportinApendixItothisprospectus.TheGrouphasadopteda

specificaprovalprocestomonitorthepriceriskandwilconsiderhedgingtheriskexposure

shouldthenedarise.

CreditRisk

Asathendofeachreportingperiod,theGroup’smaximumexposuretocreditriskwhich

wilcauseafinancialostotheGroupduetofailuretodischargeanobligationbythe

counterpartiesisthecaryingamountoftherespectiverecognisedfinancialasetsastatedinthe

consolidatedstatementsofinancialposition.

FINANCIALINFORMATION

---

Creditermsaregrantedtocustomerswhoareingodcreditreputation.Inordertominimise

thecreditrisk,managementhasdesignatedthetreasurydepartmentoftheCompanyresponsible

fordeterminationofanualcreditlimits,creditaprovalsandothermonitoringproceduresto

ensurethatfolow-upactionsaretakentorecoveroverduedebts.Inadition,thedirectorsofthe

Companyreviewtherecoverabilityofeachsignificantradedebtathendofeachreporting

periodtoensurethatadequateimpairmentlosesaremadeforirecoverableamounts.Inthis

regard,thedirectorsoftheCompanyconsiderthatheGroup’screditriskisignificantlyreduced.

TheGrouphasnosignificantconcentrationofcreditriskasociatedwithtradereceivables,with

exposurespreadoveralargenumberofcounterpartiesandcustomers.

TheGroupexpectsthathereisnosignificantcreditriskasociatedwithcashdepositsince

theyaresubstantialydepositedatstate-ownedbanksandothermediumorlarge-sizedlistedbanks.

Managementdoesnotexpecthatherewilbeanysignificantlosesfromnon-performanceby

thesecounterparties.

TheGroupalsoexpectsthathereisnosignificantcreditriskasociatedwithamountsdue

fromrelatedpartiesincecounterpartiesaremainlyrelatedpartieswithgodreputation.

LiquidityRisk

Inthemanagementoftheliquidityrisk,theGroupandtheCompanymonitorandmaintaina

levelofcashandbankbalancesandunusedbankingfacilitiesdemedadequatebymanagemento

financetheGroup’soperationsandmitigatethefectsofluctuationsincashflows.SeNote39

totheAcountant’sReportinApendixItothisprospectus.

OF-BALANCESHETARANGEMENTS

AsoftheLatestPracticableDate,wehadnotenteredintoanyof-balanceshet

arangements.

RELATEDPARTYTRANSACTIONS

Wenterintotransactionswithourelatedpartiesfromtimetotime.Fordetailsaboutour

relatedpartytransactionsduringtheTrackRecordPeriod,seNote43totheAcountants’Report

inApendixItothisprospectus.

OurDirectorsbelievethatourtransactionswithrelatedpartiesduringtheTrackRecord

Periodwereconductedonanarm’s-lengthbasis,andtheydidnotdistortouresultsofoperations

ormakeourhistoricalresultsnotreflectiveofourfutureperformance.

FINANCIALINFORMATION

---

DIVIDENDPOLICY

OurArticlesofAsociationrequireustodistributecashdividendsofnolesthan30%ofthe

averageanualdistributableprofitunderthePRCGAPinanyrolingthre-yearperiod,subject

tosignificantinvestmentorcapitalexpenditureplans,workingcapitalrequirementsandothercash

dividendconditionstipulatedintheCompany’sArticlesofAsociation.Wedistributedividends

primarilyintheformofcash,butmayalsodistributedividendsintheformofstocksora

combinationofcashandstocks.Ifdividendsinanydistributionconsistsofbothcashandstocks,

thecashdividendshalcomprisenotlesthan20%ofsuchdistribution.Anyproposed

distributionofdividendsisubjectothediscretionofourBoardandtheaprovalofour

Shareholders.OurBoardmayrecomendadistributionofdividendsinthefutureaftertakinginto

acountouresultsofoperations,financialcondition,operatingrequirements,capitalrequirements,

shareholders’interestsandanyotherconditionsthatourBoardmaydemrelevant.

NodividendwaspaidordeclaredbyourCompanyorotherentitiescomprisingourGroup

duringtheTrackRecordPeriod.AsofDecember31,2024,ourCompanydidnotrecord

acumulatedlosesacordingtotheCompany’sunconsolidatedfinancialstatementsin2024.

PursuantotheRulesforShareRepurchasebyListedCompanies(《上市公司股份回购规则》)and

theShanghaiStockExchange’sSelf-RegulatoryGuidelinesNo.7—sharerepurchase(《上海证券交易所

上市公司自律监管指引第7号—回购股份》),theRMB100,218,531.64sharerepurchasescompleted

in2024areclasifiedascashdividends,constitutingaformalshareholdereturnmechanism.

Consideringvariousfactorsuchasindustrydynamics,corporatedevelopmentstage,andour

Company’sresultsofoperations,includingtheacumulatedlosesonourconsolidatedfinancial

statementsin2024thathavenotbenmadeup,ourBoardproposednotodeclarecashdividends,

capitalreserveconversions,orbonusisuesfor2024toprotecthelong-terminterestsofal

shareholdersandtosafeguardoursustainabledevelopmentandcapitaladequacyonMarch27,

2025.OnMay16,2025,theShareholders’metingaprovedtheaforementionedproposal.As

confirmedbyourPRCLegalAdvisor,giventhatourCompanydidnotrecordacumulatedloses

acordingtotheCompany’sunconsolidatedfinancialstatementsfor2024,ourCompanycandecide

independentlywhethertopaydividendsaftersetingasidetherequiredstatutorycomonreserve

fundsinacordancewithourArticlesofAsociationandtheaplicablePRClaws.

DISTRIBUTABLERESERVES

AsofMarch31,2025,theCompanyhadaproximatelyRMB40.3milionofretainedprofits

availablefordistributiontourshareholders.

FINANCIALINFORMATION

---

WORKINGCAPITALSUFICIENCY

OurDirectorsareoftheviewthat,takingintoacountouravailableresourcesincludingcash

andcashequivalentsonhandandthenetestimatedprocedsfromtheGlobalOfering,wehave

suficientworkingcapitalforourpresentrequirementsandforthenext12monthsfromthedateof

thisprospectus.

UNAUDITEDPROFORMASTATEMENTOFADJUSTEDNETANGIBLEASETS

SeUnauditedProFormaFinancialInformationinApendixItothisprospectusfordetails.

LISTINGEXPENSES

Listingexpensesrepresentprofesionalfes,underwritingcomision,andotherfes

incuredinconectionwiththeGlobalOfering.Westimatethatourlistingexpenseswilbe

aproximatelyHK$105.4milion(asumingtheOver-alotmentOptionisnotexercisedandbased

ontheOferPriceofHK$42.80),whichacountsforaproximately5.16%ofthegrosproceds

fromtheGlobalOfering.WestimatethelistingexpensestoconsistofaproximatelyHK$61.3

milioninunderwritingfesandHK$44.1milioninon-underwritingfes(whichconsistofes

andexpensesoflegaladvisorsandourReportingAcountantofaproximatelyHK$24.9milion

andotherfesandexpensesofaproximatelyHK$19.2milion).Amongthetotalistingexpenses,

aproximatelyHK$94.6milionwilbedirectlyatributabletotheisueofourShares,whichwil

bedeductedfromequityuponthecompletionoftheGlobalOfering,andtheremaining

aproximatelyHK$10.8milionwilbexpensedinourconsolidatedstatementsofcomprehensive

los.

PROPERTYINTERESTSANDPROPERTYVALUATION

Asia-PacificConsultingandApraisalLimited,anindependentpropertyvaluer,hasvalued

certainofourpropertyinterestsasofMay31,2025andisoftheopinionthathemarketvalueof

ourpropertyinterestsasofsuchdatewasRMB1,264,338,000.Thefultextofitsleter,valuation

reportandcertificatesinconectionwithsuchpropertyinterestsaresetoutinApendixItothis

prospectus.

FINANCIALINFORMATION

---

Areconciliationofthenetbokvalueofourpropertyinterests(propertyandlanduserights

—right-of-useasets)(“PropertyInterests”)asofMarch31,2025asetoutinAcountants’

ReportinApendixItotheirmarketvalueasofMay31,2025astatedinthepropertyvaluation

reportinApendixIisetoutbelow:

(RMBinthousands)

NetbokvalueofthePropertyInterestsasofMarch31,2025

.

1,248,847

Adition

.

1,168

Depreciation

.

6,848

NetbokvalueofthePropertyInterestsasofMay31,2025

.

1,243,167

Fairvaluegain

.

21,171

MarketvalueofthePropertyInterestsasofMay31,2025asetout

inthepropertyvaluationreportinApendixItothisprospectus

.

1,264,338

Note:AnaditionaldepreciationofRMB408,000wouldbechargedagainstheincomestatementhadtheProperty

InterestsbenstatedatvaluationfortheyearendingDecember31,2025.

RECENTDEVELOPMENTANDNOMATERIALADVERSECHANGE

NoMaterialAdverseChange

OurDirectorsconfirmthat,uptothedateofthisprospectus,therehasbenomaterial

adversechangeinourfinancialortradingpositionorprospectsinceMarch31,2025,beingthe

endateoftheperiodsreportedonintheAcountant’sReportinApendixItothisprospectus,

andthereisnoeventsinceMarch31,2025thatwouldmaterialyafectheinformationasetout

intheAcountant’sReportinApendixItothisprospectus.

DISCLOSUREUNDERULES13.13TO13.19OFTHELISTINGRULES

OurDirectorsconfirmthatasoftheLatestPracticableDate,therewasnocircumstancethat

wouldgiverisetoadisclosurerequirementunderRules13.13to13.19oftheListingRules.

FINANCIALINFORMATION

---

FUTUREPLANS

Se“Busines—OurStrategies”inthisprospectusforadetailedescriptionofourfuture

plans.

USEOFPROCEDS

AsumingthatheOver-alotmentOptionisnotexercised,afterdeductingtheunderwriting

comisionsandotherestimatedoferingexpensespayablebyusinconectionwiththeGlobal

Ofering,andasuminganOferPriceofHK$42.80perHShare,westimatethatwewilreceive

netprocedsofaproximatelyHK$1,938.1milionfromtheGlobalOfering.Weintendtousethe

netprocedsfromtheGlobalOferingforthepurposesandintheamountsetforthbelow.

(cid:129)Aproximately70%ofthenetproceds,orHK$1,356.7milion,wilbeusedtoexpand

ourproductioncapacityfor8-inchandlargerSiCsubstrates.AsSiCsubstratescontinue

topenetratexistingaplicationscenarios,suchaselectricvehiclesandphotovoltaic

systems,andsimultaneouslyexpandintoemergingfields,suchasAIdatacentersand

householdapliances,thesizeofglobalSiCsubstratemarketintermsofrevenuefrom

SiCsubstratesalesgrewfromRMB3.0bilionin2020toRMB8.8bilionin2024,with

aCAGRof29.9%from2020to2024,andisprojectedtoreachRMB58.5bilionin

2030withaCAGRof37.1%from2024to2030.Thedemandforhigh-performanceSiC

powersemiconductorsfromdownstreamindustries,suchasxEVandphotovoltaicand

energystoragesystem,wilcontinuouslydrivethemarketdemandforSiCsubstrates.

Morespecificaly,withtheadvancementoftechnologyandthegrowthofmarket

demand,8-inchSiCandlargersubstratesgradualybecomethenewfocusofthe

industryduetoitshigheroutputrates,reducededgelos,andimprovedevice

performancereplacing4-inchand6-inchSiCsubstrates.Meanwhile,sizescaling

representsakeydevelopingtrendintheSiCindustryduetolarge-diametersubstrates’

costeficiencyandabilitytometdownstreamaplicationdemands.Weintendto

increaseour8-inchandlargerSiCsubstrateproductioncapacitythroughthexpansion

ofourexistingproductionplantsandthestablishmentofnewoverseasproduction

facilities,subjectoadjustmentconsideringactualcircumstances.Inthemeantime,we

aimtoupgradeourproductionlinesbyenhancingprocesesandigitalsystems,andto

buildsmartfactoriestobosteficiency.Aditionaly,weplantorecruitandtrain

profesionalteamstoimproveourdeliverycapabilities,eficiencyandqualitytosatisfy

thegrowingnedsofourdownstreamcustomers.Inparticular:

FUTUREPLANSANDUSEOFPROCEDS

---

(i)aproximately55%,orHK$1,066.0milion,wilbeusedforthexpansionofour

domesticproductionlines,mainlyinShanghai,toincreaseouranualproduction

capacityinShanghaiforlargerSiCsubstratesbyaproximately0.5milionpieces,

bythendof2027.

a.aproximately45%,orHK$872.2milion,wilbeusedforthepurchaseof

newproductionequipment,suchasfurnaces,cutingandgrindingequipment,

cleaningandpolishingequipmentandinspectiondevices,aswelasthe

constructionofsuportingfacilities,tofurtherenhanceourproduction

capacityof8-inchandlargerSiCsubstrates.Theseinvestmentswilhelp

strengthenourdeliverycapabilitiesandmaintainourleadershipin

large-diametersubstrateproduction.Weplantoalocateaproximately

HK$335.8milion,HK$405.5milionandHK$130.8milion,respectively,in

thesecond-halfof2025andeachyearin2026and2027,ofthenetproceds

forsuchpurpose.

b.aproximately7%,orHK$135.7milion,wilbeusedtoenhanceour

productioneficiency.Weplantoupgradeourexistingproductionlinesby

adoptingautomationtechnologiesuchasautomatedcranesystemsand

automatedguidedvehicletransportsystems.Furthermore,wewilcontinueto

improveourproductionprocesesandstrengthendigitalizedoperational

management.Thesemeasureswilenhancetheautomationandinteligence

levelsofourproductionlines,andoptimizeourproductioncosts,enablingus

toprovidehigh-qualityproductstocustomers.Weplantoalocate

aproximatelyHK$40.7milion,HK$81.4milionandHK$13.6milion,

respectively,inthesecond-halfof2025andeachyearin2026and2027,of

thenetprocedsforsuchpurpose.

c.aproximately3%,orHK$58.1milion,wilbeusedfortherecruitmentof

productionpersonel.Specificaly,weplantohireatotalofaproximately

100,250and250inspectionstafandenginerswithmechanicaloperations

skilsinthesecondhalfof2025,andeachyearin2026and2027,

respectively,tobuildaprofesionalandinternationalproductionteamthat

alignswithourincreasinglydiversifiedproductlines.Thisinvestmentwil

suportourexpandingproductportfolioandensureourdeliveryeficiency

andproductquality.WeplantoalocateaproximatelyHK$9.7milion,

HK$24.2milionandHK$24.2milion,respectively,inthesecond-halfof

2025andeachyearin2026and2027,ofthenetprocedsforsuchpurpose.

FUTUREPLANSANDUSEOFPROCEDS

---

(i)aproximately15%,orHK$290.7milion,wilbeusedfortheconstructionof

overseasproductionplants,mainlyinSoutheastAsia.Basedonourcustomers’

locations,weplantoestablishnewoverseasproductionplantstoexpandour

productioncapacityoflarge-diameterSiCsubstratesandimproveour

responsivenestoverseascustomerdemands.Weplantoalocateaproximately

HK$19.5milion,HK$135.8milionandHK$135.2milion,respectively,inthe

second-halfof2025andeachyearin2026and2027,ofthenetprocedsforsuch

purpose.

(cid:129)Aproximately20%ofthenetproceds,orHK$387.6milion,wilbeusedto

strengthenourR&Dcapabilitiesandmaintainourleadershipininovation.Drivenby

thesizescalingofSiCsubstrates,theprocesofsubstratepreparationand

manufacturingarebecomingincreasinglycomplicated.Toadresthesechalengesand

solidifyourtechnologicaleadership,weplantofurtherenhanceourR&Defortsby(i)

continuouslyinvestinginfundamentalresearch,suchasmaterialperformance

development,crystalgrowththermodynamicsandefectcharacterization,toimprove

ourdefectcontrolandetectioncapabilitiesandtopromotethepenetrationofSiC

technologyinestablishedandemergingfields,and(i)strengtheningourproduct

developmentcapabilitiesforSiCsubstratesnewmaterialsandaceleratingthe

comercializationofour12-inchSiCsubstratestodiversifyourproductportfolio.

Specificaly:

(i)aproximately14%,orHK$271.3milion,wilbeusedtoprocureR&Dmaterials,

includingraphitethermalinsulationmaterials,crucibles,carbonpowderand

siliconpowder.WeplantoalocateaproximatelyHK$55.6milion,HK$62.1

milion,HK$58.9milion,HK$52.1milionandHK$42.3milion,respectively,in

thesecond-halfof2025andeachyearin2026,2027,2028and2029,ofthenet

procedsforsuchpurpose.

(i)aproximately4%,orHK$77.5milion,wilbeusedtorecruitR&Dpersonel,

includingexperiencedenginersintheSiCindustryandexpertsinthefieldsof

materialscience,fluidmechanicsandthermodynamics.Weplantorecruit60,60,

80,80and80R&Dpersonelinthesecondhalfof2025,andeachyearin2026,

2027,2028,2029,respectively.ThiscompetitiveR&Dteamwilenhanceour

abilitytoinovate,strengthenourleadershipincuting-edgetechnologies.Weplan

toalocateaproximatelyHK$11.6milion,HK$11.6milion,HK$18.1milion,

HK$18.1milionandHK$18.1milion,respectively,inthesecond-halfof2025

andeachyearin2026,2027,2028and2029,ofthenetprocedsforsuchpurpose.

FUTUREPLANSANDUSEOFPROCEDS

---

(i)aproximately2%,orHK$38.8milion,wilbeusedtoprocureandupgradeR&D

andtestingequipment,suchaslaserstripingdevicesandgrindingandpolishing

machinesinthesecondhalfof2025.

WeanticipatethatheaforementionedR&Dinvestmentwilsignificantly

strengthenourexpertiseinfundamentalscienceandproductR&D,optimizeour

cuting-edgetechnicalayoutandenrichourproductportfolio.

(cid:129)Aproximately10%ofthenetproceds,orHK$193.8milion,wilbeusedasworking

capitalandforothergeneralcorporatepurposestosuportourday-to-dayoperations

andfuturebusinesdevelopment.

Theabovealocationoftheprocedswilbeadjustedonaproratabasisintheventhathe

OferPriceisfixedatahigherorlowerlevelcomparedtothemid-pointofthestimatedOfer

Pricerange.

TheaditionalnetprocedsthatwewouldreceiveiftheOver-alotmentOptionwere

exercisedinfulwouldbeHK$296.4milion.IftheOver-alotmentOptionwerexercisedinful,

weintendtoaplytheaditionalnetprocedstotheabovepurposesonaproratabasis.

WedonotexpectorelyonthenetprocedsoftheGlobalOferingtocaryonourordinary

businesoperations.TothextenthathenetprocedsoftheGlobalOferingarenotsuficiento

fundourdevelopmentplan,weintendtofundtheshortfalthroughavarietyofmeans,including

procedsfrombankingfacilitiesandcashgeneratedfromoperation.

TothextenthathenetprocedsoftheGlobalOferingarenotimediatelyusedforthe

abovepurposes,wewilonlydeposithosenetprocedsintoshort-terminterest-bearingacounts

atlicensedcomercialbanksand/orotherauthorizedfinancialinstitutions(asdefinedunderthe

SFOoraplicablelawsandregulationsinotherjurisdictions).Insuchevent,wewilcomplywith

theapropriatedisclosurerequirementsundertheListingRules.Intheventhatpartofour

listingprocedsaredeployedoverseas,wewilcomplywiththeGuidelinesonForeignExchange

BusinesesunderCapitalAcounts(Edition2024)inalmaterialrespects.DuringtheTrack

RecordPeriodandasoftheLatestPracticableDate,ourDirectorsconfirmedthatwehadno

instancesofmaterialnon-compliancewiththeseguidelines.

Wewilisueanapropriateanouncementifthereisanymaterialchangetotheabove

proposeduseofproceds.

FUTUREPLANSANDUSEOFPROCEDS

---

HONGKONGUNDERWRITERS

ChinaInternationalCapitalCorporationHongKongSecuritiesLimited

CLSALimited

HaitongInternationalSecuritiesCompanyLimited

BOCIAsiaLimited

UOBKayHian(HongKong)Limited

TheHongkongandShanghaiBankingCorporationLimited

ZhongtaiInternationalSecuritiesLimited

ICBCInternationalSecuritiesLimited

CMBInternationalCapitalLimited

CBInternationalCapitalLimited

ABCISecuritiesCompanyLimited

GFSecurities(HongKong)BrokerageLimited

ChinaGalaxyInternationalSecurities(HongKong)Co.,Limited

ShenwanHongyuanSecurities(H.K.)Limited

FutuSecuritiesInternational(HongKong)Limited

SunSecuritiesLimited

HuafuInternationalSecuritiesLimited

FosunInternationalSecuritiesLimited

TigerBrokers(HK)GlobalLimited

UNDERWRITING

ThisProspectusispublishedsolelyinconectionwiththeHongKongPublicOfering.The

HongKongPublicOferingisfulyunderwritenbytheHongKongUnderwritersonaconditional

basis.TheCompanyexpectstheInternationalOferingtobefulyunderwritenbytheInternational

Underwriters.If,foranyreason,theOferPriceisnotagredbetwentheSponsor-OC(for

themselvesandonbehalfoftheUnderwriters)andtheCompany,theGlobalOferingwilnot

procedandwilapse.

TheGlobalOferingcomprisestheHongKongPublicOferingofinitialy2,387,300Hong

KongOferSharesandtheInternationalOferingofinitialy45,358,400InternationalOfer

Shares,subject,ineachcase,torealocationonthebasisasdescribedin“StructureoftheGlobal

Ofering”inthisprospectusaswelastotheOver-alotmentOption(inthecaseofthe

InternationalOfering).

UNDERWRITING

---

UNDERWRITINGARANGEMENTSANDEXPENSES

HongKongPublicOfering

HongKongUnderwritingAgrement

TheHongKongUnderwritingAgrementwasenteredintonFriday,August8,2025.

PursuantotheHongKongUnderwritingAgrement,theCompanyisoferingtheHongKong

OferSharesforsubscriptiononthetermsandconditionsetoutinthisprospectusandtheHong

KongUnderwritingAgrementatheOferPrice.

Subjecto(a)theStockExchangegrantingaprovalforthelistingof,andpermisiontodeal

in,theHSharestobeisuedpursuantotheGlobalOfering(includingtheHShareswhichmay

beisuedpursuantothexerciseoftheOver-alotmentOption),ontheMainBoardoftheStock

Exchangeandsuchaprovalnothavingbenwithdrawnand(b)certainotherconditionsetoutin

theHongKongUnderwritingAgrement,theHongKongUnderwritershaveagredseveralybut

notjointlytoprocuresubscribersfor,orthemselvestosubscribefor,theirespectiveaplicable

proportionsoftheHongKongOferSharesbeingoferedwhicharenotakenupundertheHong

KongPublicOferingonthetermsandconditionsetoutinthisprospectusandtheHongKong

UnderwritingAgrement.

TheHongKongUnderwritingAgrementisconditionalon,amongotherthings,the

InternationalUnderwritingAgrementhavingbenexecutedandbecomingunconditionalandnot

havingbenterminatedinacordancewithitsterms.

GroundsforTermination

Ifanyoftheventsetoutbelowocuratanytimepriorto8:00a.m.ontheListingDate,

theJointSponsorsandtheSponsor-OC(forthemselvesandonbehalfoftheHongKong

Underwriters)intheirsoleandabsolutediscretion,shalhavetherightbygivinganoticetothe

CompanytoterminatetheHongKongUnderwritingAgrementwithimediatefect:

(a)thereshaldevelop,ocur,existorcomeintoefect:

(i)anyevent,orseriesofevents,inthenatureoforcemajeure(including,without

limitation,anyactsofgovernment,declarationofalocal,national,regionalor

internationalemergencyorwar,calamity,crisis,epidemic,pandemic,outbreaks,

escalation,adversemutationoragravationofdiseases(including,without

limitation,COVID-19,SevereAcuteRespiratorySyndrome(SARS),swineor

avianflu,H5N1,H1N1,H7N9,Ebolavirus,MidleEastrespiratorysyndromeand

UNDERWRITING

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suchrelated/mutatedforms),comprehensivesanctions,economicsanctions,strikes,

labourdisputes,lock-outs,otherindustrialactions,fire,explosion,floding,

earthquake,tsunami,volcaniceruption,civilcomotion,rebelion,riots,public

disorder,actsofwar,outbreakorescalationofhostilities(whetherornotwaris

declared),actsofGod,actsofterorism(whetherornotresponsibilityhasben

claimed),paralysisingovernmentoperations,interuptionsordelayin

transportation)inorafectingHongKong,thePRC,theUnitedStates,the

EuropeanUnion,JapanoranyotherjurisdictionrelevantotheGroup(eacha

“RelevantJurisdiction”andcolectively,the“RelevantJurisdictions”);

(i)anychangeordevelopmentinvolvingaprospectivechange,oranyeventor

circumstancesorseriesofeventslikelytoresultinanychangeordevelopment

involvingaprospectivechange,inanylocal,national,regionalorinternational

financial,economic,political,military,industrial,legal,fiscal,regulatory,curency,

creditormarketmatersorconditions,equitysecuritiesorexchangecontrolorany

monetaryortradingsetlementsystemorotherfinancialmarkets(including

conditionsinthestockandbondmarkets,moneyandforeignexchangemarkets,

interbankmarketsandcreditmarkets),inorafectinganyoftheRelevant

Jurisdictions;

(i)anymoratorium,suspensionorestriction(includinganyimpositionofor

requirementforanyminimumormaximumpricelimitorpricerange)inoron

tradinginsecuritiesgeneralyontheStockExchange,theNewYorkStock

Exchange,theNASDAQGlobalMarket,theLondonStockExchange,theShanghai

StockExchangeortheShenzhenStockExchange;

(iv)anygeneralmoratoriumoncomercialbankingactivitiesinthePRC(imposedby

thePeople’sBankofChina),HongKong(imposedbytheFinancialSecretaryor

theHongKongMonetaryAuthorityorothercompetentAuthority),NewYork

(imposedatheU.S.FederalorNewYorkStatelevelorbyanyothercompetent

Authority),London,theEuropeanUnionoranyoftheotherRelevantJurisdictions

(declaredbyanyrelevantcompetentauthority)oranydisruptionincomercial

bankingorforeignexchangetradingorsecuritiesetlementorclearanceservices,

proceduresormatersinorafectinganyoftheRelevantJurisdictions;

(v)anynewlaworanychangeordevelopmentinvolvingaprospectivechangein

existinglawsoregulationsoranychangeordevelopmentinvolvingaprospective

changeintheinterpretationoraplicationthereofbyanycourtoranyother

competentgovernmentalauthorityinorafectinganyoftheRelevantJurisdictions;

UNDERWRITING

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(vi)theimpositionofcomprehensivesanctionsunderanysanctionslawsoregulations,

orthewithdrawaloftradingprivilegeswhichexistedonthedateoftheHongKong

UnderwritingAgrement,inwhateverform,directlyorindirectly,byorforanyof

theRelevantJurisdictions;

(vi)anychangeordevelopmentinvolvingaprospectivechangeoramendmentinor

afectingtaxationorforeignexchangecontrol,curencyexchangeratesorforeign

investmentregulations(includingadevaluationoftheUnitedStatesdolar,the

HongKongdolarorRMBagainstorachangeinthesystemunderwhichthe

valueoftheHongKongdolarislinkedtothatoftheUnitedStatesdolarorRMB

islinkedtoanyforeigncurencyorcurencies),ortheimplementationofany

exchangecontrol,inanyoftheRelevantJurisdictionsorafectinganinvestmentin

theOferShares;

(vi)otherthanwiththepriorwritenconsentoftheJointSponsorsandthe

Sponsor-OC,theisueorequirementoisuebytheCompanyofasuplementor

anamendmentothisprospectus,theoferingcircular,thefilingstotheCSRCor

otherdocumentsinconectionwiththeoferandsaleoftheOferSharespursuant

totheCompanies(WUMP)OrdinanceortheListingRulesoruponany

requirementorequestoftheStockExchange,theCSRCand/ortheSFC;

(ix)anyvalidemandbyanycreditorsforepaymentorpaymentofanyof

indebtednesofanymemberoftheGrouporanorderorpetitionforthewinding

uporliquidationofanymemberoftheGrouporanycompositionorarangement

madebyanymemberoftheGroupwithitscreditorsoraschemeofarangement

enteredintobyanymemberoftheGrouporanyresolutionforthewinding-upof

anymemberoftheGrouportheapointmentofaprovisionaliquidator,receiver

ormanageroveralorpartoftheasetsorundertakingofanymemberofthe

Grouporanythinganalogoustheretocuringinrespectofanymemberofthe

Group;

(x)anylitigation,dispute,proceding,legalactionorclaimoregulatoryor

administrativeinvestigationoractionbeingthreatened,instigatedoranounced

againstanymemberoftheGrouporanyDirector,Supervisororanymemberof

theseniormanagementoftheCompanyasnamedinthisprospectus;

(xi)anycontraventionbyanymemberoftheGrouporanyDirector,Supervisororany

memberoftheseniormanagementoftheCompanyasnamedinthisprospectusof

anyaplicablelawsandregulations,includingtheListingRules,theCompanies

Ordinance,theCompanies(WUMP)OrdinanceandthePRCompanyLaw;

UNDERWRITING

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(xi)anyDirectorvacatinghis/herofice;

(xi)anyDirector,SupervisororseniormanagementoftheCompanyisbeingcharged

withanindictableofenceorprohibitedbyoperationoflaworotherwise

disqualifiedfromtakingadirectorship,supervisorshiporoleofsenior

managementofacompany;

(xiv)anynon-complianceofthisprospectus,theformalnoticeorthefilingstothe

CSRC(oranyotherdocumentsusedinconectionwiththecontemplated

subscriptionandsaleoftheOferSharesoranyaspectoftheGlobalOfering)

withtheListingRulesoranyotheraplicablelawsandregulations(including,

withoutlimitation,theListingRules,theCompaniesOrdinance,theCompanies

(WUMP)OrdinanceandtherelevantrulesoftheCSRC);or

(xv)anychangeordevelopmentoranyeventinvolvingaprospectivechangeor

development,oramaterialisationof,anyoftherisksetoutinthesectionheaded

“RiskFactors”inthisprospectus,

which,individualyorintheagregate,inthesoleandabsoluteopinionoftheJoint

SponsorsandtheSponsor-OC(forthemselvesandonbehalfoftheHongKong

Underwriters):

(1)hasorwilhaveorislikelytohaveamaterialadversefect;

(2)hasorwilhaveorislikelytohaveamaterialadversefectonthesucesor

marketabilityoftheGlobalOferingorthelevelofaplicationsfororthe

distributionoftheOferSharesundertheHongKongPublicOferingorthelevel

ofinterestundertheInternationalOfering;

(3)makesorwilmakeorislikelytomakeitinadvisable,inexpedient,impracticable

orincapablefortheHongKongPublicOferingand/ortheInternationalOfering

toprocedortomarketheGlobalOferingorthedeliveryordistributionofthe

OferSharesonthetermsandinthemanercontemplatedbytheOferRelated

Documents(asdefinedbelow);

(4)hasorwilhaveorislikelytohavethefectofmakinganypartoftheHong

KongUnderwritingAgrement(includingunderwritingtheHongKongPublic

Ofering)incapableorimpracticableofperformanceinacordancewithitsterms

orpreventingordelayingtheprocesingofaplicationsand/orpaymentspursuant

totheGlobalOferingorpursuantotheunderwritingthereof;or

UNDERWRITING

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(b)therehascometothenoticeoftheJointSponsorsand/ortheSponsor-OCthat:

(i)anystatementcontainedinanyoftheoferingdocuments,thefilingstotheCSRC

and/oranynotices,anouncements,advertisements,comunicationsorother

documents(includinganyanouncement,circular,documentorother

comunicationpursuantotheHongKongUnderwritingAgrement)isuedor

usedbyoronbehalfoftheCompanyinconectionwiththeHongKongPublic

Ofering(includinganysuplementoramendmentheretobutexcludingnamesand

adresesoftheUnderwriters)(the“OferRelatedDocuments”)was,whenitwas

isued,orhasbecome,untrue,incorect,inacurateorincompleteinanymaterial

respectsormisleadingordeceptive,orthatanyestimate,forecast,expresionof

opinion,intentionorexpectationcontainedinanyofsuchdocuments(including

anysuplementoramendmenthereto)isnotfairandhonestinanyrespectsand

notbasedonreasonablegroundsor,whereapropriate,notbasedonreasonable

asumptionswithreferencetothefactsandcircumstancesthensubsistingtakenas

awhole;

(i)anymaterhasarisenorhasbendiscoveredwhichwould,haditarisenorben

discoveredimediatelybeforethedateofthisprospectus,constituteamaterial

mistatementin,ormaterialomisionfromanyoftheOferRelatedDocuments;

(i)thereisabreachof,oranyeventorcircumstancerenderinguntrue,incorect,

incompleteormisleadinginanyrespect,anyoftherepresentationsorwaranties

givenbytheCompanyintheHongKongUnderwritingAgrementorthe

InternationalUnderwritingAgrement(includinganysuplementoramendment

thereto),asaplicable;

(iv)thereisamaterialbreachofanyoftheobligationsimposedupontheCompany

undertheHongKongUnderwritingAgrementortheInternationalUnderwriting

Agrement(includinganysuplementoramendmenthereto),asaplicable;

(v)thereisanevent,actoromisionwhichgivesorislikelytogiverisetoany

liabilityoftheCompanypursuantotheindemnitiesgivenbytheCompanyunder

theHongKongUnderwritingAgrement;

(vi)thereisanychangeordevelopmentinvolvingaprospectivechange,constitutingor

havingamaterialadversefect;

UNDERWRITING

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(vi)theaprovaloftheStockExchangeofthelistingof,andpermisiontodealin,the

HSharesinisueandtobeisuedpursuantotheGlobalOfering(including

pursuantoanyexerciseoftheOver-alotmentOption),otherthansubjecto

customaryconditions,isrefusedornotgrantedonorbeforetheListingDate,orif

granted,theaprovalisubsequentlywithdrawn,canceled,qualified(otherthan

bycustomaryconditions),revokedorwitheld;

(vi)thenoticeofaceptanceofthefilingstotheCSRCisuedbytheCSRCand/orthe

resultsofthefilingstotheCSRCpublishedonthewebsiteoftheCSRCis

rejected,withdrawn,revokedorinvalidated;

(ix)anypersonamedasanexpertinthisprospectus(otherthantheJointSponsors)

haswithdrawnorisubjectowithdrawingitsconsentotheisueofthis

prospectuswiththeinclusionofitsreports,letersand/orlegalopinions(asthe

casemaybe)andreferencestoitsnameincludedintheformandcontextinwhich

itrespectivelyapears;

(x)theCompanywithdrawsanyoftheoferingdocuments,thefilingstotheCSRCor

theGlobalOfering;

(xi)thereisaprohibitionontheCompanyforwhatevereasonfromofering,aloting,

isuingorselinganyoftheOferShares(includingtheaditionalHSharestobe

isuedbytheCompanypursuantothexerciseoftheOver-alotmentOption)

pursuantothetermsoftheGlobalOfering;

(xi)thereisanorderorpetitionforthewinding-upoftheCompanyoranycomposition

orarangementmadebytheCompanywithitscreditorsoraschemeof

arangemententeredintobytheCompanyoranyresolutionforthewinding-upof

theCompanyortheapointmentofaprovisionaliquidator,receiverormanager

overalorpartoftheasetsorundertakingoftheCompanyoranythinganalogous

theretocuringinrespectoftheCompany;or

(xi)amaterialportionoftheordersplacedorconfirmedinthebokbuildingproces,

oroftheinvestmentcomitmentsmadebyanycornerstoneinvestorsunder

agrementsignedwithsuchcornerstoneinvestors,havebenwithdrawn,

terminatedorcanceled.

UNDERWRITING

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UndertakingstotheStockExchangepursuantotheListingRules

(A)UndertakingsbytheCompany

PursuantoRule10.08oftheListingRules,theCompanyhasundertakentotheStock

ExchangethatitwilnotexerciseitspowertoisueanyfurtherShares,orsecuritiesconvertible

intoShares(whetherornotofaclasalreadylisted)orenterintoanyagrementosuchanisue

withinsixmonthsfromtheListingDate(whetherornotsuchisueofSharesorsecuritieswilbe

completedwithinsixmonthsfromtheListingDate),except(a)anycapitalizationisue,capital

reductionorconsolidationorsub-divisionofShares;(b)pursuantotheGlobalOfering(including

anyHShareswhichmaybeisuedpursuantothexerciseoftheOver-alotmentOption);or(c)

underanyofthecircumstancesprovidedunderRule10.08oftheListingRules.

(B)UndertakingsbythegroupofControlingShareholders

PursuantoRule10.07oftheListingRules,eachofthegroupofControlingShareholders

hasundertakentotheStockExchangeandtheCompanythat,itwilnotandwilprocurethathe

relevantregisteredholder(s)wilnotwithouthepriorwritenconsentoftheStockExchangeor

unlesotherwiseincompliancewiththeaplicablerequirementoftheListingRules:

(a)intheperiodcomencingonthedatebyreferencetowhichdisclosureofits

shareholdingsintheCompanyismadeinthisprospectusandendingonthedatewhich

isixmonthsfromtheListingDate(the“FirstSix-MonthPeriod”),eitherdirectlyor

indirectly,disposeof,norenterintoanyagrementodisposeoforotherwisecreateany

options,rights,interestsorencumbrancesinrespectof,anyofthesecuritiesofthe

Companyinrespectofwhichitishownbythisprospectustobethebeneficialowner;

and

(b)intheperiodofsixmonthsfromthexpiryoftheFirstSix-MonthPeriod,either

directlyorindirectly,disposeof,norenterintoanyagrementodisposeoforotherwise

createanyoptions,rights,interestsorencumbrancesinrespectof,anyofthesecurities

referedtoinparagraph(a)aboveif,imediatelyfolowingsuchdisposaloruponthe

exerciseorenforcementofsuchoptions,rights,interestsorencumbrances,itwould

ceasetobeagroupofControlingShareholder(asdefinedundertheListingRules).

Note2toRule10.07(2)oftheListingRulesprovidesthatheforegoingshalnotpreventhe

groupofControlingShareholdersfromusingsecuritiesoftheCompanybeneficialyownedby

themasecurity(includingachargeorapledge)infavorofanauthorizedinstitution(asdefined

intheBankingOrdinance(Chapter155oftheLawsofHongKong)forabonafidecomercial

loan.

UNDERWRITING

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PursuantoNote3toRule10.07(2)oftheListingRules,eachoftheControling

ShareholdershasundertakentotheStockExchangeandtheCompanythat,withintheperiod

comencingonthedatebyreferencetowhichdisclosureofitshareholdingintheCompanyis

madeinthisprospectusandendingonthedatewhichis12monthsfromtheListingDate,itwil:

(i)whenitpledgesorchargesanysecuritiesoftheCompanybeneficialyownedbyitin

favourofanauthorizedinstitution(asdefinedintheBankingOrdinance(Chapter155of

theLawsofHongKong)pursuantoNote2toRule10.07oftheListingRules,

imediatelyinformtheCompanyofsuchpledgeorchargetogetherwiththenumberof

securitiesopledgedorcharged;and

(i)whenitreceivesindications,eitherverbalorwriten,fromthepledgeorchargeofany

securitiesoftheCompanythatanyofthepledgedorchargedsecuritieswilbedisposed

of,imediatelyinformtheCompanyofsuchindications.

TheCompanywilinformtheStockExchangeasonasithasbeninformedofthematers

referedtoinparagraphs(i)and(i)abovebyanyoftheControlingShareholdersandsubjecto

thethenaplicablerequirementsoftheListingRulesdisclosesuchmatersbywayofan

anouncement.

UndertakingsbytheCompanypursuantotheHongKongUnderwritingAgrement

PursuantotheHongKongUnderwritingAgrement,theCompanyhasundertakentoeachof

theJointSponsorsandtheUnderwritersthat,exceptfortheisue,oferorsaleoftheOferShares

bytheCompanypursuantotheGlobalOfering(includingpursuantoanyexerciseofthe

Over-alotmentOption),theCompanywilnot,withouthepriorwritenconsentoftheJoint

SponsorsandtheSponsor-OC(forthemselvesandonbehalfoftheHongKongUnderwriters)and

unlesincompliancewiththeListingRules,atanytimeduringtheperiodcomencingonthedate

hereofandendingon,andincluding,thedatefalingsixmonthsaftertheListingDate(the“First

Six-MonthPeriod”):

(i)ofer,alot,isue,sel,aceptsubscriptionfor,ofertoalot,isueorsel,contractor

agretoalot,isueorsel,asign,mortgage,charge,pledge,hypothecate,lend,grant,

agretograntorselanyoption,warant,rightorcontractorightosubscribeforor

purchase,grant,agretograntorpurchaseanyoption,warant,contractorightoalot,

isueorsel,orotherwisetransferordisposeoforcreateanencumbranceover,oragre

totransferordisposeoforcreateanencumbranceover,eitherdirectlyorindirectly,

conditionalyorunconditionaly,anylegalorbeneficialinterestinanyHSharesor

othersecuritiesoftheCompany,oranyinterestsinanyoftheforegoing(including,but

UNDERWRITING

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notlimitedto,anysecuritiesthatareconvertibleintorexercisableorexchangeablefor,

orthatrepresentherightoreceive,oranywarantsorotherightstopurchase,any

suchHSharesorothersecuritiesoftheCompanyoranyinterestinanyofthe

foregoing),ordepositanyHSharesorothersecuritiesoftheCompany,witha

depositaryinconectionwiththeisueofdepositaryreceipts);

(i)enterintoanyswaporotherarangementhatransferstoanother,inwholeorinpart,

anyoftheconomiconsequencesofsubscriptionorownership(legalorbeneficial)of

anyHSharesorothersecuritiesoftheCompany,oranyinterestherein,oranyinterest

inanyoftheforegoing(including,withoutlimitation,anysecuritieswhichare

convertibleintorexchangeableorexercisablefor,orthatrepresentherightoreceive,

oranywarantsorotherightstopurchase,anysuchHSharesorothersecuritiesofthe

Companyoranyinterestinanyoftheforegoing);

(i)enterintoanytransactionwiththesameconomicefectasanytransactiondescribedin

(i)or(i)above;or

(iv)ofertorcontractoragretoanounce,orpubliclydisclosethatheCompanywil

ormayenterintoanysuchtransactiondescribedin(i),(i)or(i)above,

ineachcase,whetheranyofthetransactionsdescribedin(i),(i)or(i)aboveistobesetledby

deliveryofanysuchHSharesorothersecuritiesoftheCompanyor,incashorotherwise(whether

ornotheisueofsuchHSharesorothersecuritiesoftheCompanywilbecompletedwithinthe

FirstSix-MonthPeriod).Fortheavoidanceofdoubt,thelock-upundertakingaboveshalnotaply

toanyisueofdebtsecuritiesbytheCompanywhicharenotconvertibleintoequitysecuritiesof

theCompanyorofanysecuritiesofothermemberoftheGroup.

Inadition,theCompanyhasfurtherundertakentoeachoftheJointSponsorsandthe

Underwriters,intheventhat,atanytimeduringtheperiodofsixmonthsimediatelyfolowing

thexpiryoftheFirstSix-MonthPeriod,theCompanyentersintoanysuchtransactionsorofers

oragresorcontractsto,oranounces,orpubliclydiscloses,anyintentionto,enterintoanysuch

transactionsdescribedin(i),(i)or(i)above,theCompanyhasundertakentotakealreasonable

stepstoensurethatitwilnotcreateadisorderlyorfalsemarketintheSharesorothersecurities

oftheCompany.

UNDERWRITING

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HongKongUnderwriters’InterestsintheCompany

SavefortheirespectiveobligationsundertheHongKongUnderwritingAgrement,asofthe

LatestPracticableDate,noneoftheHongKongUnderwriterswasinterested,legalyor

beneficialy,directlyorindirectly,inanyHSharesoranysecuritiesofanymemberoftheGroup

orhadanyrightoroption(whetherlegalyenforceableornot)tosubscribefororpurchase,orto

nominatepersonstosubscribefororpurchase,anyHSharesoranysecuritiesofanymemberof

theGroup.

FolowingthecompletionoftheGlobalOfering,theHongKongUnderwritersandtheir

afiliatedcompaniesmayholdacertainportionoftheCompany’sHSharesasaresultofulfiling

theirespectiveobligationsundertheHongKongUnderwritingAgrement.

UNDERWRITING

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InternationalOfering

InternationalUnderwritingAgrement

InconectionwiththeInternationalOfering,theCompanyexpectstoenterintothe

InternationalUnderwritingAgrementwith,amongothers,theSponsor-OC,theJointSponsorsand

theInternationalUnderwritersonoraroundthePriceDeterminationDate.UndertheInternational

UnderwritingAgrementandsubjectotheOver-alotmentOption,theInternationalUnderwriters

would,subjectocertainconditionsetoutherein,agreseveralybutnotjointlytoprocure

subscribersfor,orthemselvestosubscribefor,theirespectiveaplicableproportionsofthe

InternationalOferSharesinitialybeingoferedpursuantotheInternationalOfering.Itis

expectedthatheInternationalUnderwritingAgrementmaybeterminatedonsimilargroundsas

theHongKongUnderwritingAgrement.Potentialinvestorshouldnotethatintheventhathe

InternationalUnderwritingAgrementisnotenteredinto,theGlobalOferingwilnotproced.

Se“StructureoftheGlobalOfering—TheInternationalOfering.”

Over-alotmentOption

TheCompanyisexpectedtograntotheInternationalUnderwriterstheOver-alotment

Option,exercisablebytheSponsor-OConbehalfoftheInternationalUnderwritersatanytime

fromtheListingDateuntil30daysafterthelastdayforlodgingaplicationsundertheHong

KongPublicOfering,pursuantowhichtheCompanymayberequiredtoisueuptoanagregate

of7,161,800HShares,representingnotmorethan15%ofthenumberofOferSharesinitialy

availableundertheGlobalOfering,atheOferPrice,tocoverover-alocationsinthe

InternationalOfering,ifany.Se“StructureoftheGlobalOfering—Over-alotmentOption.”

ComisionsandExpenses

TheUnderwriterswilreceiveanunderwritingcomisionof2.0%oftheagregateOfer

PriceofaltheOferShares(includinganyOferSharestobeisuedpursuantothexerciseof

theOver-alotmentOptionsubjectothefinaloferingsize),outofwhichtheywilpayany

sub-underwritingcomisionsandotherfes.

TheUnderwritersmayreceiveadiscretionaryincentivefeofupto1.0%oftheagregate

OferPriceofaltheOferSharestobeisuedbytheCompanyundertheGlobalOfering

(includinganyOferSharestobeisuedpursuantothexerciseoftheOver-alotmentOption).

UNDERWRITING

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AsumingfulpaymentofdiscretionaryincentivefesandbasedonanindicativeOferPrice

ofHK$42.80perOferShare,thefixedfesandiscretionaryfespayabletotheUnderwriters

representaproximately63.9%and36.1%,respectively,oftheagregatedfespayabletothe

UnderwritersinconectionwiththeGlobalOfering.

ForanyunsubscribedHongKongOferSharesrealocatedtotheInternationalOfering,the

underwritingcomisionwilnotbepaidtotheHongKongUnderwritersbutwilinsteadbepaid,

atherateaplicabletotheInternationalOfering,totherelevantInternationalUnderwriters.

TheagregateunderwritingcomisionspayabletotheUnderwritersinrelationtothe

GlobalOfering(asuminganindicativeOferPriceofHK$42.80perOferShare,theful

paymentofthediscretionaryincentivefeandthexerciseoftheOver-alotmentOptioninful)

wilbeaproximatelyHK$70.50milion.

TheagregateunderwritingcomisionsandfestogetherwiththeStockExchangelisting

fes,theSFCtransactionlevy,theAFRCtransactionlevyandtheStockExchangetradingfe,

legalandotherprofesionalfesandprintingandalotherexpensesrelatingtotheGlobal

OferingarestimatedtobeaproximatelyHK$115.51milion(asuminganindicativeOferPrice

ofHK$42.80perOferShare,thefulpaymentofthediscretionaryincentivefeandthexercise

oftheOver-alotmentOptioninful)andwilbepaidbytheCompany.

Indemnity

TheCompanyhasagredtoindemnifytheHongKongUnderwritersforcertainloseswhich

theymaysuferorincur,includinglosesarisingfromtheirperformanceoftheirobligationsunder

theHongKongUnderwritingAgrementandanybreachbytheCompanyoftheHongKong

UnderwritingAgrement.

ACTIVITIESBYSYNDICATEMEMBERS

TheunderwritersoftheHongKongPublicOferingandtheInternationalOfering(together,

the“SyndicateMembers”)andtheirafiliatesmayeachindividualyundertakeavarietyof

activities(asfurtherdescribedbelow)whichdonotformpartoftheunderwritingorstabilizing

proces.

UNDERWRITING

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TheSyndicateMembersandtheirafiliatesarediversifiedfinancialinstitutionswith

relationshipsincountriesaroundtheworld.Thesentitiesengageinawiderangeofcomercial

andinvestmentbanking,loanfinancing,brokerage,fundsmanagement,trading,hedging,investing

andotheractivitiesfortheirownacountandfortheacountofothers.Intheordinarycourseof

theirvariousbusinesactivities,theSyndicateMembersandtheirespectiveafiliatesmay

purchase,selorholdabroadarayofinvestmentsandactivelytradesecurities,derivatives,loans,

comodities,curencies,creditdefaultswapsandotherfinancialinstrumentsfortheirownacount

andfortheacountsoftheircustomers.Suchinvestmentandtradingactivitiesmayinvolveor

relatetourasets,securitiesand/orinstrumentsand/orpersonsandentitieswithrelationships

withtheCompanyandmayalsoincludeswapsandotherfinancialinstrumentsenteredintofor

hedgingpurposesinconectionwiththeGroup’sloansandotherdebt.

InrelationtotheHShares,theactivitiesoftheSyndicateMembersandtheirafiliatescould

includeactingasagentforbuyersandselersoftheHShares,enteringintotransactionswiththose

buyersandselersinaprincipalcapacity,includingasalendertoinitialpurchasersoftheH

Shares(whichfinancingmaybesecuredbytheHShares)intheGlobalOfering,proprietary

tradingintheHShares,andenteringintoverthecounterorlistederivativetransactionsor

listedorunlistedsecuritiestransactions(includingisuingsecuritiesuchasderivativewarants

listedonastockexchange)whichaveastheirunderlyingasets,asetsincludingtheHShares.

Suchtransactionsmaybecariedoutasbilateralagrementsortradeswithselectedcounterparties.

Thoseactivitiesmayrequirehedgingactivitybythosentitiesinvolving,directlyorindirectly,the

buyingandselingoftheHShares,whichmayhaveanegativeimpactonthetradingpriceofthe

HShares.AlsuchactivitiescouldocurinHongKongandelsewhereintheworldandmayresult

intheSyndicateMembersandtheirafiliatesholdinglongand/orshortpositionsintheHShares,

inbasketsofsecuritiesorindicesincludingtheHShares,inunitsofundsthatmaypurchasethe

HShares,orinderivativesrelatedtoanyoftheforegoing.

InrelationtoisuesbySyndicateMembersortheirafiliatesofanylistedsecuritieshaving

theHSharesastheirunderlyingsecurities,whetherontheStockExchangeoronanyotherstock

exchange,therulesofthestockexchangemayrequiretheisuerofthosesecurities(oroneofits

afiliatesoragents)toactasamarketmakerorliquidityproviderinthesecurity,andthiswilalso

resultinhedgingactivityintheHSharesinmostcases.

Alsuchactivitiesmayocurbothduringandafterthendofthestabilizingperiodescribed

in“StructureoftheGlobalOfering.”SuchactivitiesmayafecthemarketpriceorvalueoftheH

Shares,theliquidityortradingvolumeintheHSharesandthevolatilityofthepriceoftheH

Shares,andthextentowhichthisocursfromdaytodaycanotbestimated.

UNDERWRITING

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Itshouldbenotedthatwhenengaginginanyoftheseactivities,theSyndicateMemberswil

besubjectocertainrestrictions,includingthefolowing:

(cid:129)theSyndicateMembers(otherthantheStabilizingManageroranypersonactingforit)

mustnot,inconectionwiththedistributionoftheOferShares,efectanytransactions

(includingisuingorenteringintoanyoptionorotherderivativetransactionsrelatingto

theOferShares),whetherintheopenmarketorotherwise,withaviewtostabilizingor

maintainingthemarketpriceofanyoftheOferSharesatlevelsotherthanthosewhich

mightotherwiseprevailintheopenmarket;and

(cid:129)theSyndicateMembersmustcomplywithalaplicablelawsandregulations,including

themarketmisconductprovisionsoftheSFO,includingtheprovisionsprohibiting

insiderdealing,falsetrading,pricerigingandstockmarketmanipulation.

CertainoftheSyndicateMembersortheirespectiveafiliateshaveprovidedfromtimeto

time,andexpectoprovideinthefuture,investmentbanking,loanfinancingandotherservicesto

theCompanyandcertainofitsafiliatesforwhichsuchSyndicateMembersortheirespective

afiliateshavereceivedorwilreceivecustomaryfesandcomisions.

Inadition,theSyndicateMembersortheirespectiveafiliatesmayprovidefinancingto

investorstofinancetheirsubscriptionsoftheOferSharesintheGlobalOfering.

UNDERWRITING

---

THEGLOBALOFERING

ThisProspectusispublishedinconectionwiththeHongKongPublicOferingaspartofthe

GlobalOfering.

ThelistingoftheHSharesontheMainBoardoftheStockExchangeisponsoredbythe

JointSponsors.TheJointSponsorshavemadeanaplicationonbehalfoftheCompanytothe

StockExchangeforthelistingof,andpermisiontodealin,theHSharestobeisuedas

mentionedinthisprospectus.

47,745,700OferShareswilinitialybemadeavailableundertheGlobalOfering

comprising:

(cid:129)theHongKongPublicOferingofinitialy2,387,300OferShares(subjecto

realocation)inHongKongasdescribedin“—TheHongKongPublicOfering”below;

and

(cid:129)theInternationalOferingofinitialy45,358,400OferShares(subjectorealocation

andtheOver-alotmentOption)outsidetheUnitedStatesinofshoretransactionsin

relianceonRegulationS,asdescribedin“—TheInternationalOfering”below.

Investorsmayeither(i)aplyforHongKongOferSharesundertheHongKongPublic

Ofering;or(i)aplyfororindicateaninterestforInternationalOferSharesunderthe

InternationalOfering,butmaynotdoboth.

TheOferShareswilrepresentaproximately10.0%ofthenlargedisuedsharecapitalof

theCompanyimediatelyfolowingthecompletionoftheGlobalOfering,asumingthe

Over-alotmentOptionisnotexercised.IftheOver-alotmentOptionisexercisedinful,theOfer

Shareswilrepresentaproximately11.3%ofthenlargedisuedsharecapitaloftheCompany

imediatelyfolowingthecompletionoftheGlobalOfering.

Referencesinthisprospectustoaplications,aplicationmoniesortheprocedurefor

aplicationsrelatesolelytotheHongKongPublicOfering.

STRUCTUREOFTHEGLOBALOFERING

---

THEHONGKONGPUBLICOFERING

NumberofOferSharesinitialyofered

TheCompanyisinitialyofering2,387,300OferSharesforsubscriptionbythepublicin

HongKongatheOferPrice,representingaproximately5%ofthetotalnumberofOferShares

initialyavailableundertheGlobalOfering.ThenumberofOferSharesinitialyoferedunder

theHongKongPublicOfering,subjectoanyrealocationofOferSharesbetwenthe

InternationalOferingandtheHongKongPublicOfering,wilrepresentaproximately0.5%of

thenlargedisuedsharecapitaloftheCompanyimediatelyfolowingthecompletionofthe

GlobalOfering(asumingtheOver-alotmentOptionisnotexercised).

TheHongKongPublicOferingisopentomembersofthepublicinHongKongaswelasto

institutionalandprofesionalinvestors.Profesionalinvestorsgeneralyincludebrokers,dealers,

companies(includingfundmanagers)whoseordinarybusinesinvolvesdealinginsharesandother

securitiesandcorporatentitiesthatregularlyinvestinsharesandothersecurities.

CompletionoftheHongKongPublicOferingisubjectotheconditionsetoutin“—

ConditionsoftheGlobalOfering”below.

Alocation

AlocationofOferSharestoinvestorsundertheHongKongPublicOferingwilbebased

solelyonthelevelofvalidaplicationsreceivedundertheHongKongPublicOfering.Thebasis

ofalocationmayvary,dependingonthenumberofHongKongOferSharesvalidlyapliedfor

byaplicants.Suchalocationcould,whereapropriate,consistofbaloting,whichcouldmean

thatsomeaplicantsmayreceiveahigheralocationthanotherswhohaveapliedforthesame

numberofHongKongOferShares,andthoseaplicantswhoarenotsucesfulinthebalotmay

notreceiveanyHongKongOferShares.

Foralocationpurposesonly,thetotalnumberofHongKongOferSharesavailableunderthe

HongKongPublicOfering(aftertakingintoacountanyrealocationreferedtobelow)wilbe

dividedequalyintotwopols:polAandpolB,withanyodboardlotsbeingalocatedtoPol

A.TheHongKongOferSharesinpolAwilbealocatedonanequitablebasistoaplicants

whohaveapliedforHongKongOferShareswithanagregatepriceofHK$5milion(excluding

thebrokerage,theSFCtransactionlevy,theAFRCtransactionlevyandtheStockExchange

tradingfepayable)orles.TheHongKongOferSharesinpolBwilbealocatedonan

equitablebasistoaplicantswhohaveapliedforHongKongOferShareswithanagregate

priceofmorethanHK$5milion(excludingthebrokerage,theSFCtransactionlevy,theAFRC

transactionlevyandtheStockExchangetradingfepayable)anduptothetotalvalueinpolB.

STRUCTUREOFTHEGLOBALOFERING

---

InvestorshouldbeawarethataplicationsinpolAandaplicationsinpolBmayreceive

diferentalocationratios.IfanyHongKongOferSharesinone(butnotboth)ofthepolsare

unsubscribed,suchunsubscribedHongKongOferShareswilbetransferedtotheotherpolto

satisfydemandinthatotherpolandbealocatedacordingly.Forthepurposeoftheimediately

precedingparagraphonly,the“price”forHongKongOferSharesmeansthepricepayableon

aplicationtherefor(withoutregardtotheOferPriceasfinalydetermined).Aplicantscanonly

receiveanalocationofHongKongOferSharesfromeitherpolAorpolBandnotfromboth

pols.MultipleorsuspectedmultipleaplicationsundertheHongKongPublicOferingandany

aplicationformorethan1,193,600HongKongOferShares(aproximately50%oftheHong

KongOferSharesinitialyavailableundertheHongKongPublicOfering)isliabletobe

rejected.

Realocation

ThealocationofOferSharesbetwentheHongKongPublicOferingandtheInternational

OferingisubjectorealocationunderParagraph4.2(a)ofPracticeNote18theListingRules.

TheclawbackmechanismunderParagraph4.2(a)ofPracticeNote18oftheListingRuleswould

havethefectofincreasingthenumberofHongKongOferSharestocertainpercentagesofthe

totalnumberofOferSharestobeoferedintheGlobalOferingifcertainprescribedtotal

demandlevelsintheHongKongPublicOferingarereached.2,387,300OferSharesareinitialy

availableintheHongKongPublicOfering,representingaproximately5.0%oftheOferShares

initialyavailableforsubscriptionundertheGlobalOfering;andintheventofulsubscription

orover-subscriptionoftheInternationalOferShares,theSponsor-OCshalaplyaclawback

mechanismfolowingtheclosingoftheaplicationlistsonthefolowingbasis,subjectothe

alocationbasisastatedinChapter4.14oftheGuideforNewListingAplicantspublishedbythe

StockExchange(the“Guide”):

(cid:129)IftheHongKongPublicOferingisnotfulysubscribedfor,theSponsor-OC(for

themselvesandonbehalfoftheUnderwriters)havethediscretion(butnotobliged)to

realocatealoranyunsubscribedHongKongOferSharestotheInternationalOfering,

insuchproportionsastheSponsor-OCdemapropriate;

(cid:129)IfthenumberofOferSharesvalidlyapliedforundertheHongKongPublicOfering

represents15timesormorebutlesthan50timesthenumberoftheOferShares

initialyavailableforsubscriptionundertheHongKongPublicOfering,thenOfer

ShareswilberealocatedtotheHongKongPublicOferingfromtheInternational

Ofering,sothathetotalnumberofOferSharesavailableundertheHongKongPublic

Oferingwilbe7,161,900OferShares,representingaproximately15%oftheOfer

SharesinitialyavailableundertheGlobalOfering;

STRUCTUREOFTHEGLOBALOFERING

---

(cid:129)IfthenumberofOferSharesvalidlyapliedforundertheHongKongPublicOfering

represents50timesormorebutlesthan100timesthenumberoftheOferShares

initialyavailableforsubscriptionundertheHongKongPublicOfering,thenOfer

ShareswilberealocatedtotheHongKongPublicOferingfromtheInternational

Ofering,sothathetotalnumberofOferSharesavailableundertheHongKongPublic

Oferingwilbe11,936,500OferShares,representingaproximately25%oftheOfer

SharesinitialyavailableundertheGlobalOfering;and

(cid:129)IfthenumberofOferSharesvalidlyapliedforundertheHongKongPublicOfering

represents100timesormorethanthenumberoftheOferSharesinitialyavailablefor

subscriptionundertheHongKongPublicOfering,thenOferShareswilberealocated

totheHongKongPublicOferingfromtheInternationalOfering,sothathetotal

numberofOferSharesavailableundertheHongKongPublicOferingwilbe

16,711,000OferShares,representingaproximately35%oftheOferSharesinitialy

availableundertheGlobalOfering.

Ineachcase,theaditionalOferSharesrealocatedtotheHongKongPublicOferingwil

bealocatedbetwenpolAandpolBandthenumberofOferSharesalocatedtothe

InternationalOferingwilbecorespondinglyreducedinsuchmanerastheSponsor-OCdem

apropriate.

TheOferSharestobeoferedintheHongKongPublicOferingandtheInternational

OferingmayberealocatedasbetwentheseoferingsathediscretionoftheSponsor-OC(for

themselvesandonbehalfoftheUnderwriters)inacordancewithChapter4.14oftheGuideand

paragraph4.2(a)ofPracticeNote18oftheListingRules.Subjectotheforegoingparagraphs,the

Sponsor-OCmayintheirdiscretionrealocateOferSharesfromtheInternationalOferingtothe

HongKongPublicOferingtosatisfyvalidaplicationsundertheHongKongPublicOfering.

InacordancewithChapter4.14oftheGuide,if(i)theInternationalOferingisnotfuly

subscribedandtheHongKongPublicOferingisfulysubscribedoroversubscribedirespective

ofthenumberoftimes;or(i)theInternationalOferingisfulysubscribedoroversubscribedand

theHongKongPublicOferingisfulysubscribedoroversubscribedwiththenumberofOfer

SharesvalidlyapliedforintheHongKongPublicOferingrepresentinglesthan15timesofthe

numberofOferSharesinitialyavailableforsubscriptionundertheHongKongPublicOfering,

theSponsor-OChavetheauthoritytorealocateInternationalOferSharesoriginalyincludedin

theInternationalOferingtotheHongKongPublicOferinginsuchnumberastheydem

apropriate,providedthathetotalnumberofOferSharesavailableundertheHongKongPublic

Oferingfolowingsuchrealocationshalbenotmorethan4,774,600OferShares(representing

twiceofthenumberoftheOferSharesinitialyavailableundertheHongKongPublicOfering).

STRUCTUREOFTHEGLOBALOFERING

---

DetailsofanyrealocationofOferSharesbetwentheHongKongPublicOferingandthe

InternationalOferingwilbedisclosedinthealotmentresultsanouncementoftheGlobal

Ofering,whichisexpectedtobepublishedonMonday,August18,2025.

WheretheInternationalOferSharesareundersubscribed,iftheHongKongOferSharesare

alsoundersubscribed,theGlobalOferingwilnotprocedunlestheUnderwriterswould

subscribeorprocuresubscribersfortheirespectiveaplicableproportionsoftheOferShares

beingoferedwhicharenotakenupundertheGlobalOferingonthetermsandconditionsofthis

prospectusandtheUnderwritingAgrements.

Aplications

EachaplicantundertheHongKongPublicOferingwilberequiredtogiveanundertaking

andconfirmationintheaplicationsubmitedbyhim/herthathe/sheandanyperson(s)forwhose

benefithe/sheismakingtheaplicationhasnotapliedforortakenup,orindicatedaninterest

for,andwilnotaplyforortakeup,orindicateaninterestfor,anyInternationalOferShares

undertheInternationalOfering.Suchaplicant’saplicationisliabletoberejectedifsuch

undertakingand/orconfirmationis/arebreachedand/oruntrue(asthecasemaybe)orifhe/shehas

benorwilbeplacedoralocatedInternationalOferSharesundertheInternationalOfering.

AplicantsundertheHongKongPublicOferingarerequiredtopay,onaplication,the

maximumOferPriceinaditiontothebrokerage,theSFCtransactionlevy,theAFRCtransaction

levyandtheStockExchangetradingfepayableoneachOferShare,amountingtoatotalof

HK$4,323.17foroneboardlotof100OferShares.IftheOferPrice,asfinalydeterminedinthe

manerdescribedin“—PricingandAlocation”below,islesthanthemaximumOferPrice,

apropriaterefundpayments(includingthebrokerage,theSFCtransactionlevy,theAFRC

transactionlevyandtheStockExchangetradingfeatributabletothesurplusaplicationmonies)

wilbemadetosucesfulaplicants,withoutinterest.Furtherdetailsaresetoutin“Howto

AplyforHongKongOferShares.”

THEINTERNATIONALOFERING

NumberofOferSharesinitialyofered

TheInternationalOferingwilconsistofaninitialoferingof45,358,400OferShares

oferedbytheCompany(subjectorealocationandtheOver-alotmentOption),representing

aproximately95%ofthetotalnumberofOferSharesinitialyavailableundertheGlobal

Ofering.ThenumberofOferSharesinitialyoferedundertheInternationalOfering,subjecto

anyrealocationofOferSharesbetwentheInternationalOferingandtheHongKongPublic

STRUCTUREOFTHEGLOBALOFERING

---

Ofering,wilrepresentaproximately9.5%ofthenlargedisuedsharecapitaloftheCompany

imediatelyfolowingthecompletionoftheGlobalOfering(asumingtheOver-alotmentOption

isnotexercised).

Alocation

TheInternationalOferingwilincludeselectivemarketingofOferSharestoinstitutional

andprofesionalinvestorsandotherinvestorsanticipatedtohaveasizeabledemandforsuchOfer

SharesinHongKongandotherjurisdictionsoutsidetheUnitedStatesinrelianceonRegulationS.

Profesionalinvestorsgeneralyincludebrokers,dealers,companies(includingfundmanagers)

whoseordinarybusinesinvolvesdealinginsharesandothersecuritiesandcorporatentitiesthat

regularlyinvestinsharesandothersecurities.AlocationofOferSharespursuantothe

InternationalOferingwilbefectedinacordancewiththe“bok-building”procesdescribedin

thesubsectionheaded“PricingandAlocation”belowandbasedonanumberofactors,including

thelevelandtimingofdemand,thetotalsizeoftherelevantinvestor’sinvestedasetsorequity

asetsintherelevantsectorandwhetherornotitisexpectedthatherelevantinvestorislikelyto

buyfurtherHSharesand/orholdorselitsHSharesaftertheListing.Suchalocationisintended

toresultinadistributionoftheHSharesonabasiswhichwouldleadtothestablishmentofa

solidprofesionalandinstitutionalshareholderbasetothebenefitoftheGroupandthe

Shareholdersasawhole.

TheSponsor-OC(forthemselvesandonbehalfoftheUnderwriters)mayrequireanyinvestor

whohasbenoferedOferSharesundertheInternationalOferingandwhohasmadean

aplicationundertheHongKongPublicOferingtoprovidesuficientinformationtothe

Sponsor-OCsoastoalowthemtoidentifytherelevantaplicationsundertheHongKongPublic

OferingandtoensurethatheyarexcludedfromanyalocationofOferSharesunderthe

InternationalOfering.

Realocation

ThetotalnumberofOferSharestobeisuedorsoldpursuantotheInternationalOfering

maychangeasaresultoftheclawbackarangementdescribedin“—TheHongKongPublic

Ofering—Realocation”above,thexerciseoftheOver-alotmentOptioninwholeorinpart

and/oranyrealocationofunsubscribedOferSharesoriginalyincludedintheHongKongPublic

Ofering.

STRUCTUREOFTHEGLOBALOFERING

---

OVER-ALOTMENTOPTION

InconectionwiththeGlobalOfering,theCompanyisexpectedtograntheOver-alotment

OptiontotheInternationalUnderwriters,exercisablebytheSponsor-OC(onbehalfofthe

InternationalUnderwriters).

PursuantotheOver-alotmentOption,theInternationalUnderwriterswilhavetheright,

exercisablebytheSponsor-OC(onbehalfoftheInternationalUnderwriters)atanytimefromthe

ListingDateuntil30daysafterthelastdayforlodgingaplicationsundertheHongKongPublic

Ofering,torequiretheCompanytoisueuptoanagregateof7,161,800HShares,representing

aproximately15%ofthetotalnumberofOferSharesinitialyavailableundertheGlobal

Ofering,atheOferPriceundertheInternationalOferingtocoverover-alocationsinthe

InternationalOfering,ifany.

IftheOver-alotmentOptionisexercisedinful,theaditionalOferSharestobeisued

pursuantheretowilrepresentaproximately1.5%ofthenlargedisuedsharecapitalofthe

CompanyimediatelyfolowingthecompletionoftheGlobalOfering.IftheOver-alotment

Optionisexercised,ananouncementwilbemadebytheCompany.

STABILIZATION

Stabilizationisapracticeusedbyunderwritersinsomemarketstofacilitatethedistribution

ofsecurities.Tostabilize,theunderwritersmaybidfor,orpurchase,thesecuritiesinthe

secondarymarketduringaspecifiedperiodoftime,toretardand,ifposible,preventadeclinein

theinitialpublicmarketpriceofthesecuritiesbelowtheoferprice.Suchtransactionsmaybe

efectedinaljurisdictionswhereitispermisibletodoso,ineachcaseincompliancewithal

aplicablelawsandregulatoryrequirements,includingthoseofHongKong.InHongKong,the

priceatwhichstabilizationisefectedisnotpermitedtoexcedtheoferprice.

InconectionwiththeGlobalOfering,theStabilizingManager(oranypersonactingforit),

onbehalfoftheUnderwriters,mayover-alocateorefectransactionswithaviewtostabilizingor

suportingthemarketpriceoftheHSharesatalevelhigherthanthatwhichmightotherwise

prevailforalimitedperiodaftertheListingDate.However,thereisnobligationonthe

StabilizingManager(oranypersonactingforit)toconductanysuchstabilizingaction.Such

stabilizingaction,iftaken,(a)wilbeconductedatheabsolutediscretionoftheStabilizing

Manager(oranypersonactingforit)andinwhatheStabilizingManagereasonablyregardsas

thebestinterestoftheCompany,(b)maybediscontinuedatanytimeand(c)isrequiredtobe

broughtoanendwithin30daysafterthelastdayforlodgingaplicationsundertheHongKong

PublicOfering.

STRUCTUREOFTHEGLOBALOFERING

---

StabilizationactionpermitedinHongKongpursuantotheSecuritiesandFutures(Price

Stabilizing)RulesoftheSFOincludes(a)over-alocatingforthepurposeofpreventingor

minimizinganyreductioninthemarketpriceoftheHShares,(b)selingoragreingtoseltheH

Sharesoastoestablishashortpositioninthemforthepurposeofpreventingorminimizingany

reductioninthemarketpriceoftheHShares,(c)purchasing,oragreingtopurchase,theH

SharespursuantotheOver-alotmentOptioninordertocloseoutanypositionestablishedunder

paragraph(a)or(b)above,(d)purchasing,oragreingtopurchase,anyoftheHSharesforthe

solepurposeofpreventingorminimizinganyreductioninthemarketpriceoftheHShares,(e)

selingoragreingtoselanyHSharesinordertoliquidateanypositionestablishedasaresultof

thosepurchasesand(f)oferingoratemptingtodoanythingasdescribedinclauses(b),(c),(d)or

(e)above.

Specificaly,prospectiveaplicantsforandinvestorsintheOferShareshouldnotethat:

(cid:129)theStabilizingManager(oranypersonactingforit)may,inconectionwiththe

stabilizingaction,maintainalongpositionintheHShares;

(cid:129)thereisnocertaintyastothextentowhichandthetimeorperiodforwhichthe

StabilizingManager(oranypersonactingforit)wilmaintainsuchalongposition;

(cid:129)liquidationofanysuchlongpositionbytheStabilizingManager(oranypersonacting

forit)andselingintheopenmarketmayhaveanadverseimpactonthemarketpriceof

theHShares;

(cid:129)nostabilizingactioncanbetakentosuporthepriceoftheHSharesforlongerthan

thestabilizationperiod,whichwilbeginontheListingDate,andisexpectedtoexpire

onSaturday,September13,2025,beingthe30thdayafterthelastdayforlodging

aplicationsundertheHongKongPublicOfering.Afterthisdate,whenofurther

stabilizingactionmaybetaken,demandfortheHShares,andthereforethepriceofthe

HShares,couldfal;

(cid:129)thepriceoftheHSharescanotbeasuredtostayatorabovetheOferPricebythe

takingofanystabilizingaction;and

(cid:129)stabilizingbidsortransactionsefectedinthecourseofthestabilizingactionmaybe

madeatanypriceatorbelowtheOferPriceandcan,therefore,bedoneataprice

belowthepricepaidbyaplicantsfor,orinvestorsin,theOferShares.

STRUCTUREOFTHEGLOBALOFERING

---

TheCompanywilensurethatananouncementincompliancewiththeSecuritiesand

Futures(PriceStabilizing)RulesoftheSFOwilbemadewithinsevendaysofthexpirationof

thestabilizationperiod.

Over-Alocation

Folowinganyover-alocationofHSharesinconectionwiththeGlobalOfering,the

StabilizingManager(oranypersonactingforit)maycoversuchover-alocationsbyexercisingthe

Over-alotmentOptioninfulorinpart,usingHSharespurchasedbytheStabilizingManager(or

anypersonactingforit)inthesecondarymarketatpricesthatdonotexcedtheOferPriceora

combinationofthesemeans.

PRICINGANDALOCATION

DeterminingthePricingoftheOferShares

PricingfortheOferSharesforthepurposeofthevariousoferingsundertheGlobal

OferingwilbedeterminedonthePriceDeterminationDate,whichisexpectedtobeonorbefore

Friday,August15,2025,byagrementbetwentheSponsor-OC(forthemselvesandonbehalfof

theUnderwriters)andtheCompany,andthenumberofOferSharestobealocatedunderthe

variousoferingswilbedeterminedshortlythereafter.

WewildeterminetheOferPricebyreferenceto,amongotherfactors,theclosingpriceof

theASharesontheShanghaiStockExchangeonthelastradingdayonorbeforethePrice

DeterminationDate(whichisacesibletotheShareholdersandpotentialinvestorsat

htps:/english.se.com.cn/markets/equities/list/overview/?COMPANY_CODE=688234&STOCKCODE=688234),

andtheOferPricewilnotbemorethanHK$42.80.ThehistoricalpricesofourASharesand

tradingvolumeonShanghaiStockExchangearesetoutbelow.

PeriodHighLowADTV

(1)

(RMB)(RMB)(AShares)

YearendedDecember31,2022

.

137.500041.00002,363,128

YearendedDecember31,2023

.

95.600049.09002,619,883

YearendedDecember31,2024

.

75.590040.88004,518,312

Yearof2025(uptotheLatest

PracticableDate)

.

79.770046.32006,046,049

Note:

(1)Averagedailytradingvolume(“ADTV”)representsdailyaveragenumberofourASharestradedovertherelevant

period.

STRUCTUREOFTHEGLOBALOFERING

---

AplicantsundertheHongKongPublicOferingmustpay,onaplication,themaximum

OferPriceplusbrokerageof1.0%,SFCtransactionlevyof0.0027%,AFRCtransactionlevyof

0.00015%andStockExchangetradingfeof0.00565%,amountingtoatotalofHK$4,323.17for

oneboardlotof100OferShares.

TheInternationalUnderwriterswilbesolicitingfromprospectiveinvestors’indicationsof

interestinacquiringOferSharesintheInternationalOfering.Prospectiveprofesionaland

institutionalinvestorswilberequiredtospecifythenumberofOferSharesunderthe

InternationalOferingtheywouldbepreparedtoacquireitheratdiferentpricesorataparticular

price.Thisproces,knownas“bok-building,”isexpectedtocontinueupto,andtoceaseonor

about,thelastdayforlodgingaplicationsundertheHongKongPublicOfering.

TheSponsor-OC(forthemselvesandonbehalfoftheUnderwriters)may,wheretheydem

apropriate,basedonthelevelofinterestexpresedbyprospectiveinvestorsduringthe

bok-buildingprocesinrespectoftheInternationalOfering,andwiththeconsentofthe

Company,reducethenumberofOferSharesand/orthemaximumOferPricestatedinthis

prospectusatanytimeonorpriortothemorningofthelastdayforlodgingaplicationsunderthe

HongKongPublicOfering.Insuchcase,theCompanywil,asonaspracticablefolowingthe

decisiontomakesuchreduction,andinanyeventnotlaterthanthemorningofthelastdayfor

lodgingaplicationsundertheHongKongPublicOfering,causetobepublishedonthewebsites

oftheCompanyandtheStockExchangeatw.sic.candw.hkexnews.hk,respectively,

noticesofthereductioninthenumberofOferSharesand/orthemaximumOferPrice,the

cancelationoftheGlobalOferingandrelaunchoftheoferatherevisednumberofOferShares

and/ormaximumOferPrice.

TheCompanywilalso,asonaspracticablefolowingthedecisiontomakesuchchange,

isueasuplementalornewprospectusupdatinginvestorsofthereductioninthenumberofOfer

Sharesand/orthemaximumOferPrice,andgivinginvestorsatleasthrebusinesdaysto

considerthenewinformation.Thesuplementalornewprospectushalincludeatleasthe

folowing:updated(a)maximumOferPriceandmarketcapitalization;(b)listingtimetableand

underwritingobligations;(c)price/earningsmultiple(ifaplicable),unauditedproformand

adjustednetangibleasets;and(d)useofprocedsandworkingcapitaladequacyconfirmation

basedonrevisedestimatedproceds.IntheventofareductioninthenumberofOferShares,the

Sponsor-OCmayalsoatheirdiscretionrealocatethenumberofOferSharestobeoferedunder

theHongKongPublicOferingandtheInternationalOfering,providedthathenumberofOfer

SharesoferedundertheHongKongPublicOferingshalnotbelesthan5%oftheOferShares

availableundertheGlobalOfering(withoutakingintoacountanyaditionalHSharesthatmay

beisuedpursuantotheOver-alotmentOption).Intheabsenceofanysuchsuplementalornew

prospectusopublished,thenumberofOferShareswilnotbereducedandtheOferPrice,if

STRUCTUREOFTHEGLOBALOFERING

---

agreduponbytheSponsor-OC(forthemselvesandonbehalfoftheUnderwriters)andour

Company,wilundernocircumstancesbesetabovethemaximumOferPriceastatedinthis

prospectus.

BeforesubmitingaplicationsfortheHongKongOferShares,aplicantshouldhave

regardtotheposibilitythatanyanouncementofareductioninthenumberofOferSharesmay

notbemadeuntilthedaywhichisthelastdayforlodgingaplicationsundertheHongKong

PublicOfering.Intheabsenceofanysuchnoticesoanouncedandanysuchsuplemental

prospectusornewprospectusopublished,thenumberofOferShareswilnotbereduced.

IfthereisanychangetotheofersizeduetochangeinthenumberofOferSharesoferedin

theGlobalOfering(otherthanpursuantothexerciseoftheOver-alotmentOptionand/orthe

realocationmechanismasdisclosedinthisprospectus),oriftheOferPricefalsoutsidethe

MaximumOferPriceastatedinthisprospectus,oriftheCompanybecomesawarethatherehas

benasignificantchangeafectinganymatercontainedinthisprospectusorasignificantnew

materhasarisen,theinclusionofinformationinrespectofwhichwouldhavebenrequiredtobe

inthisprospectusifithadarisenbeforethisprospectuswasisued,aftertheisueofthis

prospectusandbeforethecomencementofdealingsinourHSharesasprescribedunderRule

11.13oftheListingRules,wearerequiredtocanceltheGlobalOferingandrelaunchtheofer

withasuplementalprospectusoranewprospectusinFINI,andgivinginvestorsatleasthre

businesdaystoconsiderthenewinformation.

AnouncementofFinalPricingoftheOferShares

ThefinalpricingoftheOferShares,thelevelofindicationsofinterestintheInternational

Ofering,thelevelofaplicationsintheHongKongPublicOfering,thebasisofalocationsof

theHongKongOferSharesandtheresultsofalocationsintheHongKongPublicOferingare

expectedtobemadeavailablethroughavarietyofchanelsinthemanerdescribedin“Howto

AplyforHongKongOferShares—B.PublicationofResults.”

UNDERWRITING

TheHongKongPublicOferingisfulyunderwritenbytheHongKongUnderwritersunder

thetermsandconditionsoftheHongKongUnderwritingAgrementandisubjecto,among

otherthings,theSponsor-OC(forthemselvesandonbehalfoftheUnderwriters)andtheCompany

agreingontheOferPrice.

TheCompanyexpectstoenterintotheInternationalUnderwritingAgrementrelatingtothe

InternationalOferingonoraroundthePriceDeterminationDate.

STRUCTUREOFTHEGLOBALOFERING

---

Theseunderwritingarangements,includingtheUnderwritingAgrements,aresumarizedin

“Underwriting.”

CONDITIONSOFTHEGLOBALOFERING

AceptanceofalaplicationsforOferShareswilbeconditionalon:

(cid:129)theStockExchangegrantingaprovalforthelistingof,andpermisiontodealin,theH

Sharestobeisuedasmentionedinthisprospectus,ontheMainBoardoftheStock

Exchangeandsuchaprovalnotsubsequentlyhavingbenwithdrawnorevokedprior

totheListingDate;

(cid:129)thepricingoftheOferShareshavingbenagredbetwentheSponsor-OC(for

themselvesandonbehalfoftheUnderwriters)andtheCompany;

(cid:129)thexecutionandeliveryoftheInternationalUnderwritingAgrementonoraround

thePriceDeterminationDate;and

(cid:129)theobligationsoftheHongKongUnderwritersundertheHongKongUnderwriting

AgrementandtheobligationsoftheInternationalUnderwritersundertheInternational

UnderwritingAgrementbecomingandremainingunconditionalandnothavingben

terminatedinacordancewiththetermsoftherespectiveagrements,

ineachcaseonorbeforethedatesandtimespecifiedintherespectiveUnderwritingAgrements

(unlesandtothextentsuchconditionsarevalidlywaivedonorbeforesuchdatesandtimes)

and,inanyevent,notlaterthanthedatewhichis30daysafterthedateofthisprospectus.

If,foranyreason,theOferPriceisnotagredbetwentheSponsor-OC(forthemselvesand

onbehalfoftheUnderwriters)andtheCompanyby12:00nononFriday,August15,2025,the

GlobalOferingwilnotprocedandwilapse.

TheconsumationofeachoftheHongKongPublicOferingandtheInternationalOfering

isconditionalupon,amongotherthings,theotheroferingbecomingunconditionalandnothaving

benterminatedinacordancewithitsterms.

Iftheaboveconditionsarenotfulfiledorwaivedpriortothedatesandtimespecified,the

GlobalOferingwilapseandtheStockExchangewilbenotifiedimediately.Noticeofthe

lapseoftheHongKongPublicOferingwilbepublishedbytheCompanyonthewebsitesofthe

CompanyandtheStockExchangeatw.sic.candw.hkexnews.hk,respectively,onthe

nextdayfolowingsuchlapse.Insuchasituation,alaplicationmonieswilbereturned,without

STRUCTUREOFTHEGLOBALOFERING

---

interest,onthetermsetoutin“HowtoAplyforHongKongOferShares—D.

Despatch/ColectionofHShareCertificatesandRefundofAplicationMonies.”Inthemeantime,

alaplicationmonieswilbeheldinseparatebankacount(s)withthereceivingbanksorother

bank(s)inHongKonglicensedundertheBankingOrdinance(Chapter155oftheLawsofHong

Kong).

HSharecertificatesfortheOferShareswilonlybecomevalidevidenceoftitleat8:00a.m.

onTuesday,August19,2025,providedthatheGlobalOferinghasbecomeunconditionalinal

respectsatorbeforethatime.

DEALINGSINTHESHARES

AsumingthatheHongKongPublicOferingbecomesunconditionalatorbefore8:00a.m.

inHongKongonTuesday,August19,2025,itisexpectedthatdealingsintheHSharesonthe

StockExchangewilcomenceat9:00a.m.onTuesday,August19,2025.

TheHShareswilbetradedinboardlotsof100HShareseachandthestockcodeoftheH

Shareswilbe2631.

NOTICETOCAPITALMARKETINTERMEDIARIESANDPROSPECTIVEINVESTORS

PURSUANTOPARAGRAPH21OFTHESFCODEOFCONDUCT

ImportantNoticetoCMIs(includingprivatebanksandbrokingcompanies)

ThisnoticetoCMIs(includingprivatebanksandbrokingcompanies)isasumaryofcertain

obligationstheCodeofConductforPersonsLicensedbyorRegisteredwiththeSecuritiesand

FuturesComision(the“Code”)imposesonCMIs,whichrequiretheatentionandcoperation

ofotherCMIs(includingprivatebanksandbrokingcompanies).CertainCMImayalsobeacting

astheOveralCordinatorsfortheGlobalOferingandisubjectoaditionalrequirementsunder

theCode.

ProspectiveinvestorstowhomthealocationofOferShareswilbesubjectorestrictionsor

requirepriorconsentfromtheStockExchangeundertheListingRulesandotheregulatory

requirementsorguidanceisuedbytheStockExchangefromtimetotime(the“StockExchange

Requirements”)wouldbeconsideredundertheCodeas“RestrictedInvestors.”OferSharesmay

onlybealocatedtoRestrictedInvestorsinacordancewithaplicableStockExchange

Requirementsandbemadewithaviewtoachievinganopenmarket,anadequatespreadof

shareholdersandtheorderlyandfairtradingofthesharesinthesecondarymarket.Prospective

investorshouldprovidealinformationrequiredbytheStockExchangetobesubmitedinthe

StockExchange’splacelistemplateorundertheListingRulesandidentifyanyplacecategories

STRUCTUREOFTHEGLOBALOFERING

---

setoutinthetemplatethataplywhenplacinganorder.Prospectiveinvestorswhodonotindicate

thatanyoftheplacecategoriesaplywilbedemedtoconfirmthatnoneofthemaplyand

representhatheyandtheirespectiveultimatebeneficialownersarethirdpartiesindependent

fromtheCompany.

CMIshouldspecificalydisclosewhethertheirinvestorclientsareRestrictedInvestorsor

falwithinanyoftheotherplacecategoriesetoutintheStockExchange’splacelistemplate

orundertheListingRuleswhensubmitingordersfortheOferShares.Inadition,privatebanks

andbrokingcompanieshouldtakealreasonablestepstoidentifywhethertheirinvestorclients

areRestrictedInvestorsorfalwithinanyoftheplacecategoriesetoutintheStockExchange’s

placelistemplateorundertheListingRulesandinformtheUnderwritersacordingly.

CMIsareinformedthathemarketingandinvestortargetingstrategyfortheGlobalOfering

includesinstitutionalinvestors,long-onlyinvestors,sovereignwealthfunds,pensionfunds,hedge

funds,corporates,privatebanks/brokingcompanies,familyoficesandhighnetworthindividuals,

ineachcase,subjectotheaplicableStockExchangeRequirementsandtheselingrestrictions

setoutinthisprospectus.

CMIshouldensurethatordersplacedarebonafide,arenotinflatedandonotconstitute

duplicatedorders(i.e.twormorecorespondingoridenticalordersplacedviatwormore

CMIs).CMIshouldalsoensurethatinvestors(andtheirespectiveultimatebeneficialowners)

procuredbythemarethirdpartiesindependentoftheCompanyandthatheinvestors(andtheir

respectiveultimatebeneficialowners)havethefinancialcapacitytometalobligationsarising

fromtheorderandarenotfinancedirectlyorindirectlyby,oracustomedtotakinginstructions

from,theCompany,anyofitsDirectors,chiefexecutives,controlingshareholder(s),substantial

shareholder(s)orexistingshareholder(s)oftheCompanyoranyofitsubsidiaries,oraclose

asociateofanyofthem(asuchtermsaredefinedintheListingRules).CMIshouldenquire

withtheirinvestorclientsregardinganyorderswhichapearunusualoriregular.CMIshould

disclosetheidentitiesofalinvestorswhensubmitingordersfortheOferShares(exceptfor

omnibusorderswhereunderlyinginvestorinformationmaynedtobeprovidedtoanyOveral

Cordinatorswhensubmitingorders).Failuretoprovideunderlyinginvestorinformationfor

omnibusorders,whererequiredtodoso,wilresultinthatorderbeingrejected.CMIshouldnot

place“X-orders”intotheorderbok.

CMIshouldsegregateandclearlyidentifytheirownproprietaryorders(andthoseoftheir

groupcompanies,includingprivatebanksandbrokingcompaniesasthecasemaybe)intheorder

bokandbokmesages.ProprietaryordersmayonlybealowedsubjectotheStockExchange

Requirements.

STRUCTUREOFTHEGLOBALOFERING

---

CMIs(includingprivatebanksandbrokingcompanies)shouldnotoferanyrebatesto

prospectiveinvestorsorpasonanyrebatesprovidedbytheCompany.Inadition,CMIs

(includingprivatebanksandbrokingcompanies)shouldnotenterintoarangementswhichmay

enableanyofitsinvestorclientstopaylesthanthetotalconsiderationaspecifiedinthis

prospectusforeachoftheOferSharesalocated.

TheCoderequiresthataCMIdisclosecompleteandacurateinformationinatimelymaner

onthestatusoftheorderbokandotherelevantinformationitreceivestotargetedinvestorsfor

themtomakeaninformedecision.Inordertodothis,thoseUnderwritersincontroloftheorder

bokshouldconsiderdisclosingorderbokupdatestoalCMIs.

WhenplacinganorderfortheOferShares,privatebankshouldisclose,athesametime,

ifsuchorderisplacedotherthanona“principal”basis(wherebyitisdeployingitsownbalance

shetforonwardselingtoinvestors).Privatebankswhodonotprovidesuchdisclosureare

herebydemedtobeplacingtheirorderonsucha“principal”basis.Privatebankswhodisclose

thatheyareplacingtheirorderotherthanona“principal”basis(i.e.,theyareactingasanagent)

shouldnotethatsuchordermaybeconsideredtobeanomnibusorderpursuantotheCode.

PrivatebankshouldbeawarethatifanyoftheirgroupcompaniesisaCMIoftheGlobal

Ofering,placinganorderona“principal”basismayrequiretheUnderwriterstoaplythe

“proprietaryorders”requirementsoftheCodetosuchorder.

Inrelationtomnibusorders,whensubmitingsuchorders,CMIs(includingprivatebanks

andbrokingcompanies)arerequestedtoprovidethefolowingunderlyinginvestorinformationin

respectofeachorderconstitutingtherelevantomnibusorder(failuretoprovidesuchinformation

wilresultinthatorderbeingrejected).Underlyinginvestorinformationinrelationtomnibus

ordershouldconsistof:(a)thenameofeachunderlyinginvestor;(b)auniqueidentification

numberforeachinvestor;(c)whetheranunderlyinginvestorisa“RestrictedInvestor”(asusedin

theCode);(d)whetheranyunderlyinginvestororderisa“ProprietaryOrder”(asusedinthe

Code);(e)whetheranyunderlyinginvestororderisaduplicateorder.Underlyinginvestor

informationinrelationtomnibusordershouldbesentotheOveralCordinators.

TothextentinformationbeingdisclosedbyCMIsandinvestorsispersonaland/or

confidentialinature,CMIs(includingprivatebanksandbrokingcompanies)agreandwarant:

(a)totakeapropriatestepstosafeguardthetransmisionofsuchinformationtoanyOveral

Cordinators;and(b)thatheyhaveobtainedthenecesaryconsentsfromtheunderlyinginvestors

todisclosesuchinformationtoanyOveralCordinators.Bysubmitinganorderandproviding

suchinformationtoanyOveralCordinators,eachCMI(includingprivatebanksandbroking

companies)furtherwarantsthatheyandtheunderlyinginvestorshaveunderstodandconsented

tothecolection,disclosure,useandtransferofsuchinformationbyanyOveralCordinators

and/oranyotherthirdpartiesasmayberequiredbytheListingRulesand/ortheCode,including

STRUCTUREOFTHEGLOBALOFERING

---

totheCompany,relevantregulatorsand/oranyotherthirdpartiesasmayberequiredbythe

ListingRulesand/ortheCode,forthepurposeofcomplyingwiththeListingRulesand/orthe

Code,duringthebokbuildingprocesfortheGlobalOfering.CMIsthatreceivesuchunderlying

investorinformationareremindedthatsuchinformationshouldbeusedonlyforsubmitingorders

intheGlobalOfering.TheUnderwritersmaybeaskedtodemonstratecompliancewiththeir

obligationsundertheCode,andmayrequestotherCMIs(includingprivatebanksandbroking

companies)toprovidevidenceshowingcompliancewiththeobligationsabove(inparticular,that

thenecesaryconsentshavebenobtained).Insuchevent,otherCMIs(includingprivatebanks

andbrokingcompanies)arerequiredtoprovidetheOveralCordinatorswithsuchevidence

withinthetimelinerequested.

ImportantNoticetoProspectiveInvestors

ProspectiveinvestorshouldbeawarethatcertainintermediariesinthecontextoftheGlobal

OferingoftheOferShares,includingcertainUnderwriters,areCMIsubjectoParagraph21of

theCode.ThisnoticetoprospectiveinvestorsisasumaryofcertainobligationstheCode

imposesonsuchCMIs,whichrequiretheatentionandcoperationofprospectiveinvestors.

CertainCMIsmayalsobeactingastheOveralCordinatorsfortheGlobalOferingandare

subjectoaditionalrequirementsundertheCode.

ProspectiveinvestorstowhomthealocationofOferShareswilbesubjectorestrictionsor

requirepriorconsentfromtheStockExchangeundertheStockExchangeRequirementswouldbe

consideredundertheCodeas“RestrictedInvestors.”OferSharesmayonlybealocatedto

RestrictedInvestorsinacordancewithaplicableStockExchangeRequirements.Prospective

investorswhoareRestrictedInvestorshouldspecificalydisclosewhethertheyareRestricted

InvestorswhenplacinganorderfortheOferShares.Prospectiveinvestorswhodonotdisclose

theyareRestrictedInvestorsareherebydemednotobeRestrictedInvestorsandnotfinanced

directlyorindirectlyby,noracustomedtotakinginstructionsfromtheCompanyortheRestricted

Investors.

ProspectiveinvestorshouldprovidealinformationrequiredbytheStockExchangetobe

submitedintheStockExchange’splacelistemplateorundertheListingRulesandidentifyany

placecategoriesasetoutinthetemplatethataplywhenplacinganorder.Prospectiveinvestors

whodonotindicatethatanyoftheplacecategoriesaplywilbedemedtoconfirmthatnoneof

themaplyandrepresenthatheyandtheirespectiveultimatebeneficialownersarethirdparties

independentfromtheCompany.

Prospectiveinvestorshouldensure,andbyplacinganorderprospectiveinvestorsare

demedtoconfirm,thatordersplacedarebonafide,arenotinflatedandonotconstitute

duplicatedorders(i.e.twormorecorespondingoridenticalordersplacedviatwormore

STRUCTUREOFTHEGLOBALOFERING

---

CMIs).Prospectiveinvestorshouldalsoensure,andbyplacinganorderaredemedtoconfirm,

thathey(andtheirespectiveultimatebeneficialowners)havethefinancialcapacitytometal

obligationsarisingfromtheorderandarenotfinancedirectlyorindirectlyby,oracustomedto

takinginstructionsfrom,theCompany,anyofitsDirectors,chiefexecutives,controling

shareholder(s),substantialshareholder(s)orexistingshareholder(s)oftheCompanyoranyofits

subsidiaries,oracloseasociateofanyofthem(asuchtermsaredefinedintheListingRules).If

aprospectiveinvestorisanasetmanagementarmafiliatedwithanyUnderwriter,such

prospectiveinvestorshouldindicatewhenplacinganorderifitisforafundorportfoliowherethe

Underwriteroritsgroupcompanyhasmorethan50%interest,inwhichcaseitwilbeclasified

asa“proprietaryorder”andsubjectoapropriatehandlingbyCMIsinacordancewiththeCode

andtheListingRules.Prospectiveinvestorswhodonotindicatethisinformationwhenplacingan

orderareherebydemedtoconfirmthatheirorderisnota“proprietaryorder.”Ifaprospective

investorisotherwiseafiliatedwithanyUnderwriter,suchthatitsordermaybeconsideredtobea

“proprietaryorder”(pursuantotheCode),suchprospectiveinvestorshouldindicatetothe

relevantUnderwriterwhenplacingsuchorderandsuchorderswilbesubjectoaplicable

requirementsinacordancewiththeCodeandtheListingRules.Prospectiveinvestorswhodonot

indicatethisinformationwhenplacinganorderareherebydemedtoconfirmthatheirorderis

nota“proprietaryorder.”

ProspectiveinvestorshouldbeawarethatcertaininformationmaybedisclosedbyCMIs

(includingprivatebanksandbrokingcompanies)whichispersonaland/orconfidentialinatureto

theprospectiveinvestor.Byplacinganorder,prospectiveinvestorsaredemedtohaveunderstod

andconsentedtothecolection,disclosure,useandtransferofsuchinformationbythe

Underwritersand/oranyotherthirdpartiesasmayberequiredbytheListingRulesand/orthe

Code,includingtotheCompany,theOveralCordinators,relevantregulatorsand/oranyother

thirdpartiesasmayberequiredbytheListingRulesand/ortheCode,itbeingunderstodand

agredthatsuchinformationshalonlybeusedforthepurposeofcomplyingwiththeListing

Rulesand/ortheCode,duringthebokbuildingprocesfortheGlobalOfering.Failuretoprovide

suchinformationwilresultinthatorderbeingrejected.

STRUCTUREOFTHEGLOBALOFERING

---

IMPORTANTNOTICETOINVESTORSOF

HONGKONGOFERSHARES

FULYELECTRONICAPLICATIONPROCES

TheCompanyhasadoptedafulyelectronicaplicationprocesfortheHongKong

PublicOferingandbelowaretheproceduresforaplication.

ThisProspectusisavailableathewebsiteoftheStockExchangeat

w.hkexnews.hkunderthe“HKEXnews>NewListings>NewListingInformation”

section,andtheCompany’swebsiteatw.sic.c.

Thecontentsofthisprospectusareidenticaltotheprospectusasregisteredwiththe

RegistrarofCompaniesinHongKongpursuantoSection342CoftheCompanies(WindingUp

andMiscelaneousProvisions)Ordinance.

A.APLICATIONFORHONGKONGOFERSHARES

1.WhoCanAply

YoucanaplyforHongKongOferSharesifyouortheperson(s)forwhosebenefityouare

aplyingfor:

(cid:129)are18yearsofageorolder;

(cid:129)haveaHongKongadres(fortheWhiteFormeIPOserviceonly);and

(cid:129)areoutsidetheUnitedStates(withinthemeaningofRegulationS)orareaperson

describedinparagraph(h)(3)ofRule902ofRegulationS.

UnlespermitedbytheListingRulesorawaiverand/orconsenthasbengrantedbythe

StockExchangetotheCompany,youcanotaplyforanyHongKongOferSharesifyouorthe

person(s)forwhosebenefityouareaplyingfor:

(cid:129)areanexistingShareholderoftheCompany;

(cid:129)areaDirector,SupervisororchiefexecutiveoftheCompanyand/oradirector,

supervisororchiefexecutiveofanyofitsubsidiaries;

HOWTOAPLYFORHONGKONGOFERSHARES

---

(cid:129)areacloseasociate(asdefinedintheListingRules)ofanyoftheabovepersons;

(cid:129)areaconectedperson(asdefinedintheListingRules)oftheCompanyorwilbecome

aconectedpersonoftheCompanyimediatelyuponthecompletionoftheGlobal

Ofering;or

(cid:129)havebenalocatedorhaveapliedfororindicatedaninterestinanyInternational

OferSharesorotherwiseparticipateintheInternationalOfering.

2.AplicationChanels

TheHongKongPublicOferingperiodwilbeginat9:00amonMonday,August11,

2025andendat12:00nononThursday,August14,2025(HongKongtime).

ToaplyforHongKongOferShares,youmayuseoneofthefolowingaplication

chanels:

AplicationChanelPlatformTargetInvestorsAplicationTime

WhiteFormeIPO

service

.

w.eipo.com.hkAplicantswhowould

liketoreceivea

physicalHShare

certificate.Hong

KongOferShares

sucesfulyaplied

forwilbealoted

andisuedinyour

owname.

From9:00a.m.on

Monday,August11,

2025until11:30

a.m.onThursday,

August14,2025

andthelatestime

forcompletingful

paymentof

aplicationmonies

inrespectofsuch

aplicationswilbe

12:00nonon

Thursday,August

14,2025

HOWTOAPLYFORHONGKONGOFERSHARES

---

AplicationChanelPlatformTargetInvestorsAplicationTime

HKSCEIPO

chanel

.

YourbrokerorcustodianwhoisaHKSC

Participantwilsubmitelectronic

aplicationinstructiononyourbehalf

throughHKSC’sFINIsystemin

acordancewithyourinstruction.

Aplicantswhowould

notliketoreceivea

physicalHShare

certificate.Hong

KongOferShares

sucesfulyaplied

forwilbealoted

andisuedinthe

nameofHKSC

Nomines,

depositedirectly

intoCASand

creditedtoyour

designatedHKSC

Participant’stock

acount.

Contactyourbroker

orcustodianforthe

earliestandlatest

timeforgivingsuch

instructions,asthis

mayvarybybroker

orcustodian.

TheWhiteFormeIPOserviceandtheHKSCEIPOchanelarefacilitiesubjecto

capacitylimitationsandpotentialserviceinteruptionsandyouareadvisednotowaituntilthe

lastdayoftheaplicationperiodtoaplyforHongKongOferShares.

ForthoseaplyingthroughtheWhiteFormeIPOservice,onceyoucompletepaymentin

respectofanyaplicationinstructionsgivenbyouorforyourbenefithroughtheWhiteForm

eIPOservicetomakeanaplicationforHongKongOferShares,anactualaplicationshalbe

demedtohavebenmade.Ifyouareapersonforwhosebenefithelectronicaplication

instructionsaregiven,youshalbedemedtohavedeclaredthatonlyonesetofelectronic

aplicationinstructionshasbengivenforyourbenefit.Ifyouareanagentforanotherperson,

youshalbedemedtohavedeclaredthatyouhaveonlygivenonesetofelectronicaplication

instructionsforthebenefitofthepersonforwhomyouareanagentandthatyouareduly

authorizedtogivethoseinstructionsasanagent.

Fortheavoidanceofdoubt,givinganaplicationinstructionundertheWhiteFormeIPO

servicemorethanonceandobtainingdiferentaplicationreferencenumberswithoutefectingful

paymentinrespectofaparticulareferencenumberwilnotconstituteanactualaplication.

IfyouaplythroughtheWhiteFormeIPOservice,youaredemedtohaveauthorizedthe

WhiteFormeIPOServiceProvidertoaplyonthetermsandconditionsinthisprospectus,as

suplementedandamendedbythetermsandconditionsoftheWhiteFormeIPOservice.

HOWTOAPLYFORHONGKONGOFERSHARES

---

ByinstructingyourbrokerorcustodiantoaplyfortheHongKongOferSharesonyour

behalfthroughtheHKSCEIPOchanel,you(and,ifyouarejointaplicants,eachofyou

jointlyandseveraly)aredemedtohaveinstructedandauthorizedHKSCtocauseHKSC

Nomines(actingasnominefortherelevantHKSCParticipants)toaplyforHongKongOfer

Sharesonyourbehalfandtodonyourbehalfalthethingstatedinthisprospectusandany

suplementoit.

ForthoseaplyingthroughHKSCEIPOchanel,anactualaplicationwilbedemedto

havebenmadeforanyaplicationinstructionsgivenbyouorforyourbenefitoHKSC(in

whichcaseanaplicationwilbemadebyHKSCNominesonyourbehalf)providedsuch

aplicationinstructionhasnotbenwithdrawnorotherwiseinvalidatedbeforetheclosingtimeof

theHongKongPublicOfering.

HKSCNomineswilonlybeactingasanomineforyouandneitherHKSCnorHKSC

NomineshalbeliabletoyouoranyotherpersoninrespectofanyactionstakenbyHKSCor

HKSCNominesonyourbehalftoaplyforHongKongOferSharesorforanybreachofthe

termsandconditionsofthisprospectus.

3.InformationRequiredtoAply

Youmustprovidethefolowinginformationwithyouraplication:

ForIndividual/JointAplicantsForCorporateAplicants

(cid:129)Fulname(s)ashownonyouridentity

document

(cid:129)Fulname(s)ashownonyouridentity

document

(cid:129)Identitydocument’sisuingcountryor

jurisdiction

(cid:129)Identitydocument’sisuingcountryor

jurisdiction

(cid:129)Identitydocumentype,withorderof

priority:

(cid:129)Identitydocumentype,withorderof

priority:

i.HKIDcard;or

i.Nationalidentificationdocument;or

i.Pasport;and

i.LEIregistrationdocument;or

i.Certificateofincorporation;or

i.Businesregistrationcertificate;or

iv.Otherequivalentdocument;and

(cid:129)Identitydocumentnumber(cid:129)Identitydocumentnumber

HOWTOAPLYFORHONGKONGOFERSHARES

---

Notes:

1.IfyouareaplyingthroughtheWhiteFormeIPOservice,youarerequiredtoprovideavalide-mailadres,a

contactelephonenumberandaHongKongadres.Youarealsorequiredtodeclarethatheidentityinformation

providedbyoufolowstherequirementsasdescribedinNote2below.Inparticular,whereyoucanotprovidea

HKIDnumber,youmustconfirmthatyoudonotholdaHKIDcard.

2.Theaplicant’sfulnameashownontheiridentitydocumentmustbeusedandthesurname,givename,midle

andothernames(ifany)mustbeinputinthesameorderashownontheidentitydocument.Ifanaplicant’s

identitydocumentcontainsbothanEnglishandChinesename,bothEnglishandChinesenamesmustbeused.

Otherwise,eitherEnglishorChinesenameswilbeacepted.Theorderofpriorityoftheaplicant’sidentity

documentypemustbestrictlyfolowedandwhereanindividualaplicanthasavalidHKIDcard(includingboth

HongKongResidentsandHongKongPermanentResidents),theHKIDnumbermustbeusedwhenmakingan

aplicationtosubscribeforHongKongOferShares.Similarlyforcorporateaplicants,anLEInumbermustbe

usedifanentityhasanLEIcertificate.

3.Iftheaplicantisatruste,theclientidentificationdata(“CID”)ofthetruste,asetoutabove,wilberequired.

Iftheaplicantisaninvestmentfund(i.e.acolectiveinvestmentscheme,orCIS),theCIDoftheaset

managementcompanyortheindividualfund,asapropriate,whichasopenedatradingacountwiththebroker

wilberequired,asabove.

4.ThemaximumnumberofjointaplicantsonFINIiscapedat4inacordancewithmarketpractice.

5.Ifyouareaplyingasanomine,youmustprovide:(i)thefulname(ashownontheidentitydocument),the

identitydocument’sisuingcountryorjurisdiction,theidentitydocumentype;and(i)theidentitydocument

number,foreachofthebeneficialownersor,inthecase(s)ofjointbeneficialowners,foreachjointbeneficial

owner.Ifyoudonotincludethisinformation,theaplicationwilbetreatedasbeingmadeforyourbenefit.

6.Ifyouareaplyingasanunlistedcompanyand(i)theprincipalbusinesofthatcompanyisdealinginsecurities;

and(i)youexercisestatutorycontroloverthatcompany,thentheaplicationwilbetreatedasbeingforyour

benefitandyoushouldprovidetherequiredinformationinyouraplicationastatedabove.

“Unlistedcompany”meansacompanywithnoequitysecuritieslistedontheStockExchangeoranyotherstock

exchange.

“Statutorycontrol”meansyou:

(cid:129)controlthecompositionoftheboardofdirectorsofthecompany;

(cid:129)controlmorethanhalfofthevotingpowerofthecompany;or

(cid:129)holdmorethanhalfoftheisuedsharecapitalofthecompany(notcountinganypartofitwhichcariesno

rightoparticipatebeyondaspecifiedamountinadistributionofeitherprofitsorcapital).

ForthoseaplyingthroughHKSCEIPOchanel,andmakinganaplicationunderapower

ofatorney,theCompanyandtheSponsor-OC,astheCompany’sagent,havediscretionto

considerwhethertoaceptitonanyconditionstheythinkfit,includingevidenceoftheatorney’s

authority.

HOWTOAPLYFORHONGKONGOFERSHARES

---

Failingtoprovideanyrequiredinformationmayresultinyouraplicationbeingrejected.

4.PermitedNumberofHongKongOferSharesforAplication

Boardlotsize

.

:100HShares

PermitednumberofHong

KongOferSharesfor

aplicationandamount

payableon

aplication/sucesful

alotment

.

:HongKongOferSharesareavailablefor

aplicationinspecifiedboardlotsizesonly.

Pleaserefertotheamountpayableasociated

witheachspecifiedboardlotsizeinthetable

below.

ThemaximumOferPriceisHK$42.80perH

Share.

IfyouareaplyingthroughtheHKSCEIPO

chanel,yourbrokerorcustodianmayrequire

youtopre-fundyouraplicationinsuchamount

asdeterminedbythebrokerorcustodian,

basedontheaplicablelawsandregulationsin

HongKong.Youareresponsibleforcomplying

withanysuchpre-fundingrequirementimposed

byourbrokerorcustodianwithrespectothe

HongKongOferSharesyouapliedfor.

Byinstructingyourbrokerorcustodiantoaply

fortheHongKongOferSharesonyourbehalf

throughtheHKSCEIPOchanel,you(and,if

youarejointaplicants,eachofyoujointlyand

severaly)aredemedtohaveinstructedand

authorizedHKSCtocauseHKSCNomines

(actingasnominefortherelevantHKSC

Participants)toarangepaymentofthefinal

OferPrice,thebrokerage,theSFCtransaction

levy,theStockExchangetradingfeandthe

AFRCtransactionlevybydebitingtherelevant

nominebankacountathedesignatedbankfor

yourbrokerorcustodian.

HOWTOAPLYFORHONGKONGOFERSHARES

---

IfyouareaplyingthroughtheWhiteFormeIPO

service,youmayrefertothetablebelowforthe

amountpayableforthenumberofHSharesyou

haveselected.Youmustpaytherespective

maximumamountpayableonaplicationinful

uponaplicationforHongKongOferShares.

No.ofHongKong

OferShares

apliedfor

Amount

payable

(2)

onaplication

No.ofHongKong

OferShares

apliedfor

Amount

payable

(2)

onaplication

No.ofHongKong

OferShares

apliedfor

Amount

payable

(2)

onaplication

No.ofHongKong

OferShares

apliedfor

Amount

payable

(2)

onaplication

HK$HK$HK$HK$

1004,323.171,50064,847.468,000345,853.1090,0003,890,847.42

2008,646.322,00086,463.289,000389,084.74100,0004,323,163.80

30012,969.502,500108,079.1010,000432,316.38200,0008,646,327.60

40017,292.663,000129,694.9120,000864,632.75300,00012,969,491.40

50021,615.823,500151,310.7230,0001,296,949.15400,00017,292,655.20

60025,938.984,000172,926.5540,0001,729,265.52500,00021,615,819.00

70030,262.144,500194,542.3750,0002,161,581.90600,00025,938,982.80

80034,585.305,000216,158.1960,0002,593,898.28800,00034,585,310.40

90038,908.486,000259,389.8370,0003,026,214.651,000,00043,231,638.00

1,00043,231.647,000302,621.4780,0003,458,531.051,193,600

(1)

51,601,283.11

(1)MaximumnumberofHongKongOferSharesyoumayaplyfor.

(2)Theamountpayableisinclusiveofbrokerage,SFCtransactionlevy,theStockExchangetradingfeandAFRC

transactionlevy.Ifyouraplicationisucesful,brokeragewilbepaidtotheExchangeParticipants(asdefined

intheListingRules)andtheSFCtransactionlevy,theStockExchangetradingfeandAFRCtransactionlevyare

paidtotheStockExchange(inthecaseoftheSFCtransactionlevy,colectedbytheStockExchangeonbehalfof

theSFC;andinthecaseoftheAFRCtransactionlevy,colectedbytheStockExchangeonbehalfoftheAFRC).

5.MultipleAplicationsProhibited

Youoryourjointaplicant(s)shalnotmakemorethanoneaplicationforyourownbenefit,

exceptwhereyouareanomineandprovidetheinformationoftheunderlyinginvestorinyour

aplicationasrequiredundertheparagrapheaded“—A.AplicationsforHongKongOfer

Shares—3.InformationRequiredtoAply”inthisection.Ifyouaresuspectedofsubmitingor

causetosubmitmorethanoneaplication,alofyouraplicationswilberejected.

HOWTOAPLYFORHONGKONGOFERSHARES

---

Multipleaplicationsmadeitherthrough(i)theWhiteFormeIPOservice,(i)HKSC

EIPOchanel,or(i)bothchanelsconcurentlyareprohibitedandwilberejected.Ifyouhave

madeanaplicationthroughtheWhiteFormeIPOserviceorHKSCEIPOchanel,youorthe

person(s)forwhosebenefityouhavemadetheaplicationshalnotaplyforanyOferSharesin

theGlobalOfering.

6.TermsandConditionsofAnAplication

ByaplyingforHongKongOferSharesthroughtheWhiteFormeIPOserviceorHKSC

EIPOchanel,you(orasthecasemaybe,HKSCNomineswildothefolowingthingson

yourbehalf):

(i)undertaketoexecutealrelevantdocumentsandinstructandauthorizetheCompany

and/ortheSponsor-OC,astheCompany’sagents,toexecuteanydocumentsforyouand

todonyourbehalfalthingsnecesarytoregisteranyHongKongOferShares

alocatedtoyouinyournameorinthenameofHKSCNominesasrequiredbythe

ArticlesofAsociation,and(ifyouareaplyingthroughtheHKSCEIPOchanel)to

deposithealotedHongKongOferSharesdirectlyintoCASforthecreditofyour

designatedHKSCParticipant’stockacountonyourbehalf;

(i)confirmthatyouhavereadandunderstandthetermsandconditionsandaplication

proceduresetoutinthisprospectusandthedesignatedwebsiteoftheWhiteForm

eIPOservice(orasthecasemaybe,theagrementyouenteredintowithyourbrokeror

custodian),andagretobeboundbythem;

(i)(ifyouareaplyingthroughtheHKSCEIPOchanel)agretothearangements,

undertakingsandwarantiesundertheparticipantagrementbetwenyourbrokeror

custodianandHKSCandobservetheGeneralRulesofHKSCandtheHKSC

OperationalProceduresforgivingaplicationinstructionstoaplyforHongKongOfer

Shares;

(iv)confirmthatyouareawareoftherestrictionsonofersandsalesofHSharesetoutin

thisprospectusandtheydonotaplytoyou,ortheperson(s)forwhosebenefityou

havemadetheaplication;

(v)confirmthatyouhavereadthisprospectusandanysuplementoitandhaverelied

onlyontheinformationandrepresentationscontainedthereininmakingyour

aplication(orasthecasemaybe,causingyouraplicationtobemade)andwilnot

relyonanyotherinformationorepresentations;

HOWTOAPLYFORHONGKONGOFERSHARES

---

(vi)agrethatheCompany,theJointSponsors,theSponsor-OC,theOveralCordinators,

theJointGlobalCordinators,theJointBokruners,theJointLeadManagers,the

CapitalMarketIntermediaries,theUnderwriters,anyoftheirespectivedirectors,

oficers,employes,partners,agents,advisersandanyotherpartiesinvolvedinthe

GlobalOfering(the“RelevantPersons”),theHShareRegistrarandHKSCwilnot

beliableforanyinformationandrepresentationsnotinthisprospectusandany

suplementoit;

(vi)agretodisclosethedetailsofyouraplicationandyourpersonaldatandanyother

personaldatawhichmayberequiredaboutyouandtheperson(s)forwhosebenefityou

havemadetheaplicationtotheCompany,theRelevantPersons,theHShareRegistrar,

HKSC,HKSCNomines,theStockExchange,theSFCandanyotherstatutory

regulatoryorgovernmentalbodiesorotherwiseasrequiredbylaws,rulesoregulations,

forthepurposesundertheparagraphsheaded“—G.PersonalData—3.Purposes”and

“—4.Transferofpersonaldata”inthisection;

(vi)agre(withoutprejudicetoanyotherightswhichyoumayhaveonceyouraplication

(orasthecasemaybe,HKSCNomines’aplication)hasbenacepted)thatyouwil

notrescinditbecauseofaninocentmisrepresentation;

(ix)agrethatsubjectoSection44A(6)oftheCompanies(WindingUpandMiscelaneous

Provisions)Ordinance,anyaplicationmadebyouorHKSCNominesonyour

behalfcanotberevokedonceitisacepted,whichwilbevidencedbythe

notificationoftheresultofthebalotbytheHShareRegistrarbywayofpublicationof

theresultsathetimeandinthemaneraspecifiedintheparagrapheaded“—B.

PublicationofResults”inthisection;

(x)confirmthatyouareawareofthesituationspecifiedintheparagrapheaded“—C.

CircumstancesinwhichYouwilnotBeAlocatedHongKongOferShares”inthis

section;

(xi)agrethatyouraplicationorHKSCNomines’aplication,anyaceptanceofitand

theresultingcontractwilbegovernedbyandconstruedinacordancewiththelawsof

HongKong;

(xi)agretocomplywiththeCompaniesOrdinance,theCompanies(WindingUpand

MiscelaneousProvisions)Ordinance,theArticlesofAsociationandlawsofanyplace

outsideHongKongthataplytoyouraplicationandthatneithertheCompanynorthe

HOWTOAPLYFORHONGKONGOFERSHARES

---

RelevantPersonswilbreachanylawinsideand/oroutsideHongKongasaresultofthe

aceptanceofyourofertopurchase,oranyactionarisingfromyourightsand

obligationsunderthetermsandconditionscontainedinthisprospectus;

(xi)confirmthat(a)youraplicationorHKSCNomines’aplicationonyourbehalfisnot

financedirectlyorindirectlybytheCompany,anyoftheDirectors,Supervisors,chief

executives,substantialshareholder(s)orexistingshareholder(s)oftheCompanyorany

ofitsubsidiariesoranyoftheirespectivecloseasociates;and(b)youarenot

acustomedorwilnotbeacustomedtotakinginstructionsfromtheCompany,anyof

theDirectors,Supervisors,chiefexecutives,substantialshareholder(s)orexisting

shareholder(s)oftheCompanyoranyofitsubsidiariesoranyoftheirespectiveclose

asociatesinrelationtotheacquisition,disposal,votingorotherdispositionoftheH

Sharesregisteredinyournameorotherwiseheldbyou;

(xiv)waranthatheinformationyouhaveprovidedistrueandacurate;

(xv)confirmthatyounderstandthatheCompanyandtheSponsor-OCwilrelyonyour

declarationsandrepresentationsindecidingwhetherornotoalocateanyHongKong

OferSharestoyouandthatyoumaybeprosecutedformakingafalsedeclaration;

(xvi)agretoaceptHongKongOferSharesapliedfororanylesernumberalocatedto

youndertheaplication;

(xvi)declareandrepresenthathisistheonlyaplicationmadeandtheonlyaplication

intendedbyoutobemadetobenefityouorthepersonforwhosebenefityouare

aplying;

(xvi)(iftheaplicationismadeforyourownbenefit)waranthatnotheraplicationhas

benorwilbemadeforyourbenefitbygivingelectronicaplicationinstructionsto

HKSCdirectlyorindirectlyorthroughtheWhiteFormeIPOserviceorbyanyone

asyouragentorbyanyotherperson;and

(xix)(ifyouaremakingtheaplicationasanagentforthebenefitofanotherperson)warant

that(1)notheraplicationhasbenorwilbemadebyouasagentfororforthe

benefitofthatpersonorbythatpersonorbyanyotherpersonasagentforthatperson

bygivingelectronicaplicationinstructionstoHKSCand(2)youhavedue

authoritytogivelectronicaplicationinstructionsonbehalfofthatotherpersonas

itsagent.

HOWTOAPLYFORHONGKONGOFERSHARES

---

B.PUBLICATIONOFRESULTS

ResultsofAlocation

YoucancheckwhetheryouaresucesfulyalocatedanyHongKongOferSharesthrough:

PlatformDate/Time

AplyingthroughWhiteFormeIPOserviceorHKSCEIPOchanel:

Website

.

Thedesignatedresultsofalocationwebsiteat

w.iporesults.com.hk(alternatively:

w.eipo.com.hk/eIPOAlotment)witha“searchby

ID”function.

Thefulistof(i)wholyorpartialysucesful

aplicantsusingtheWhiteFormeIPOserviceand

HKSCEIPOchanel,and(i)thenumberofHong

KongOferSharesconditionalyalotedtothem,

amongotherthings,wilbedisplayedonthe

“AlotmentResults”pageoftheWhiteFormeIPO

serviceatw.iporesults.com.hk(alternatively:

w.eipo.com.hk/eIPOAlotment).

24hours,from11:00

p.m.onMonday,

August18,2025to

12:00midnighton

Sunday,August24,

2025(HongKong

time)

TheStockExchange’swebsiteatw.hkexnews.hkand

theCompany’swebsiteatw.sic.cwhichwil

providelinkstotheabovementionedwebsitesofthe

HShareRegistrar.

Nolaterthan11:00

p.m.onMonday,

August18,2025

(HongKongtime)

Telephone

.

+85228628555—thealocationresultstelephone

inquirylineprovidedbytheHShareRegistrar

betwen9:00a.m.and

6:00p.m.on

Tuesday,August19,

2025,Wednesday,

August20,2025,

Thursday,August

21,2025andFriday,

August22,2025

ForthoseaplyingthroughHKSCEIPOchanel,youmayalsocheckwithyourbrokeror

custodianfrom6:00p.m.onFriday,August15,2025(HongKongtime).

HOWTOAPLYFORHONGKONGOFERSHARES

---

HKSCParticipantscanlogintoFINIandreviewthealotmentresultfrom6:00p.m.on

Friday,August15,2025(HongKongtime)ona24-hourbasisandshouldreportanydiscrepancies

onalotmentstoHKSCasonaspracticable.

AlocationAnouncement

TheCompanyexpectstoanouncetheresultsofthefinalOferPrice,thelevelofindications

ofinterestintheInternationalOfering,thelevelofaplicationsintheHongKongPublicOfering

andthebasisofalocationsofHongKongOferSharesontheStockExchange’swebsiteat

w.hkexnews.hkandtheCompany’swebsiteatw.sic.cbynolaterthan11:00p.m.on

Monday,August18,2025(HongKongtime).

C.CIRCUMSTANCESINWHICHYOUWILNOTBEALOCATEDHONGKONG

OFERSHARES

YoushouldnotethefolowingsituationsinwhichHongKongOferShareswilnotbe

alocatedtoyouortheperson(s)forwhosebenefityouareaplyingfor:

1.Ifyouraplicationisrevoked:

YouraplicationortheaplicationmadebyHKSCNominesonyourbehalfmaybe

revokedpursuantoSection44A(6)oftheCompanies(WindingUpandMiscelaneousProvisions)

Ordinance.

2.IftheCompanyoritsagentsexercisetheirdiscretiontorejectyouraplication:

TheCompany,theSponsor-OC,theHShareRegistrarandtheirespectiveagentsand

nomineshavefuldiscretiontorejectoraceptanyaplication,ortoaceptonlypartofany

aplication,withoutgivinganyreasons.

3.IfthealocationofHongKongOferSharesisvoid:

ThealocationofHongKongOferShareswilbevoidiftheStockExchangedoesnotgrant

permisiontolistheHShareseither:

(cid:129)withinthreweksfromtheclosingdateoftheaplicationlists;or

(cid:129)withinalongerperiodofuptosixweksiftheStockExchangenotifiestheCompanyof

thatlongerperiodwithinthreweksoftheclosingdateoftheaplicationlists.

HOWTOAPLYFORHONGKONGOFERSHARES

---

4.If:

(cid:129)youmakemultipleaplicationsorsuspectedmultipleaplications.Youmayrefertothe

paragrapheaded“—A.AplicationforHongKongOferShares—5.Multiple

AplicationsProhibited”inthisectiononwhatconstitutesmultipleaplications;

(cid:129)youraplicationinstructionisincomplete;

(cid:129)yourpayment(orconfirmationofunds,asthecasemaybe)isnotmadecorectly;

(cid:129)theUnderwritingAgrementsdonotbecomeunconditionalorareterminated;

(cid:129)theCompanyortheSponsor-OCbelievethatbyaceptingyouraplication,itorthe

Companywouldviolateaplicablesecuritiesorotherlaws,rulesoregulations.

5.IfthereismoneysetlementfailureforalotedOferShares:

BasedonthearangementsbetwenHKSCParticipantsandHKSC,HKSCParticipants

wilberequiredtoholdsuficientaplicationfundsondepositwiththeirdesignatedbankbefore

baloting.AfterbalotingofHongKongOferShares,thereceivingbankswilcolectheportion

ofthesefundsrequiredtosetleachHKSCParticipant’sactualHongKongOferShare

alotmentfromtheirdesignatedbank.

Thereisariskofmoneysetlementfailure.Inthextremeventofmoneysetlement

failurebyaHKSCParticipant(oritsdesignatedbank),whoisactingonyourbehalfinsetling

paymentforyouralotedOferShares,HKSCwilcontacthedefaultingHKSCParticipant

anditsdesignatedbanktodeterminethecauseofailureandrequestsuchdefaultingHKSC

Participantorectifyorprocuretorectifythefailure.

However,ifitisdeterminedthatsuchsetlementobligationcanotbemet,theafectedHong

KongOferShareswilberealocatedtotheInternationalOfering.HongKongOferShares

apliedforbyouthroughthebrokerorcustodianmaybeafectedtothextentofthesetlement

failure.Inthextremecase,youwilnotbealocatedanyHongKongOferSharesduetothe

moneysetlementfailurebysuchHKSCParticipant.NoneoftheCompany,theRelevantPersons,

theHShareRegistrarandHKSCisorwilbeliableifHongKongOferSharesarenotalocated

toyouduetothemoneysetlementfailure.

HOWTOAPLYFORHONGKONGOFERSHARES

---

D.DESPATCH/COLECTIONOFHSHARECERTIFICATESANDREFUNDOF

APLICATIONMONIES

YouwilreceiveoneHSharecertificateforalHongKongOferSharesalotedtoyounder

theHongKongPublicOfering(exceptpursuantoaplicationsmadethroughtheHKSCEIPO

chanelwheretheHSharecertificateswilbedepositedintoCASasdescribedbelow).

NotemporarydocumentoftitlewilbeisuedinrespectoftheOferShares.Noreceiptwil

beisuedforsumspaidonaplication.

HSharecertificateswilonlybecomevalidevidenceoftitleat8:00a.m.onTuesday,August

19,2025(HongKongtime),providedthatheGlobalOferinghasbecomeunconditional,andthe

rightofterminationdescribedinthesectionheaded“Underwriting”inthisprospectushasnotben

exercised.InvestorswhotradeHSharespriortothereceiptofHSharecertificatesortheHShare

certificatesbecomingvalidevidenceoftitledosoentirelyatheirownrisk.

TherightisreservedtoretainanyHSharecertificate(s)and(ifaplicable)anysurplus

aplicationmoniespendingclearanceofaplicationmonies.

Thefolowingsetsoutherelevantproceduresandtime:

WhiteFormeIPOserviceHKSCEIPOchanel

Despatch/colectionofHSharecertificate

Forphysicalsharecertificates

ofequalorover1,000,000

OferSharesisuedunder

yourowname

.

ColectioninpersonfromtheHShare

Registrar,ComputershareHongKong

InvestorServicesLimited,atShops

1712−1716,17thFlor,Hopewel

Centre,183Quen’sRoadEast,

Wanchai,HongKong

HSharecertificate(s)wilbeisuedin

thenameofHKSCNomines,

depositedintoCASandcreditedto

yourdesignatedHKSCParticipant’s

stockacount

Time:from9:00a.m.to1:00p.m.on

Tuesday,August19,2025(HongKong

time),oranyotherplaceordate

notifiedbytheCompany

Noactionbyouisrequired

HOWTOAPLYFORHONGKONGOFERSHARES

---

WhiteFormeIPOserviceHKSCEIPOchanel

Ifyouareanindividual,youmustnot

authorizeanyotherpersontocolect

foryou.Ifyouareacorporate

aplicant,yourauthorized

representativemustbearaleterof

authorizationfromyourcorporation

stampedwithyourcorporation’schop.

Bothindividualsandauthorized

representativesmustproduce,athe

timeofcolection,evidenceofidentity

aceptabletotheHShareRegistrar.

Note:IfyoudonotcolectyourHShare

certificate(s)personalywithinthetime

above,it/theywilbesentothe

adrespecifiedinyouraplication

instructionsbyordinarypostatyour

ownrisk

Forphysicalsharecertificates

oflesthan1,000,000Ofer

Sharesisuedunderyour

owname

.

YourHSharecertificate(s)wilbesento

theadrespecifiedinyour

aplicationinstructionsbyordinary

postatyourownrisk

Time:Monday,August18,2025

Refundmechanismforsurplusaplicationmoniespaidbyou

Date

.

Tuesday,August19,2025Subjectothearangementbetwenyou

andyourbrokerorcustodian

Responsibleparty

.

HShareRegistrarYourbrokerorcustodian

Aplicationmoniespaid

throughsinglebank

acount

.

WhiteForme-Refundpayment

instructionstoyourdesignatedbank

acount

Yourbrokerorcustodianwilarange

refundtoyourdesignatedbankacount

subjectothearangementbetwenyou

andit

HOWTOAPLYFORHONGKONGOFERSHARES

---

WhiteFormeIPOserviceHKSCEIPOchanel

Aplicationmoniespaid

throughmultiplebank

acounts

.

Refundcheck(s)wilbedespatchedtothe

adresaspecifiedinyouraplication

instructionsbyordinarypostatyour

ownrisk

1ExceptintheventanySevereWeatherSignals(asdefinedbelow)inforceinHongKonginthemorningon

Monday,August18,2025renderingitimposiblefortherelevantHSharecertificatestobedispatchedtoHKSC

inatimelymaner,theCompanyshalprocuretheHShareRegistrartoarangefordeliveryofthesuporting

documentsandHSharecertificatesinacordancewiththecontingencyarangementsasagredbetwenthem.You

mayreferto“—E.SevereWeatherArangements”inthisection.

E.SEVEREWEATHERARANGEMENTS

TheOpeningandClosingoftheAplicationLists

TheaplicationlistswilnotopenorcloseonThursday,August14,2025if,thereis/are:

(cid:129)atropicalcyclonewarningsignalnumber8orabove;

(cid:129)ablackrainstormwarning;and/or

(cid:129)anExtremeCondition,

(colectively,the“SevereWeatherSignal(s)”),inforceinHongKongatanytimebetwen9:00

a.m.and12:00nononThursday,August14,2025.

Insteadtheywilopenbetwen11:45a.m.and12:00nonand/orcloseat12:00nononthe

nextbusinesdaywhichdoesnothaveSevereWeatherSignalsinforceatanytimebetwen9:00

a.m.and12:00non.

Prospectiveinvestorshouldbeawarethatapostponementoftheopening/closingofthe

aplicationlistsmayresultinadelayintheListingDate.Shouldtherebeanychangestothedates

mentionedinthesectionheaded“ExpectedTimetable”inthisprospectus,ananouncementwilbe

madeandpublishedontheStockExchange’swebsiteatw.hkexnews.hkandtheCompany’s

websiteatw.sic.coftherevisedtimetable.

IfaSevereWeatherSignalishoistedonMonday,August18,2025,theHShareRegistrarwil

makeapropriatearangementsforthedeliveryoftheHSharecertificatestotheCAS

Depository’servicecountersothatheywouldbeavailablefortradingonTuesday,August19,

2025,andforphysicalHSharecertificatesoflesthan1,000,000OferSharesisuedunderyour

HOWTOAPLYFORHONGKONGOFERSHARES

---

owname,despatchwilbemadebyordinarypostwhenthepostoficereopensaftertheSevere

WeatherSignalisloweredorcanceled(e.g.intheafternonofMonday,August18,2025oron

Tuesday,August19,2025).

IfaSevereWeatherSignalishoistedonTuesday,August19,2025,forphysicalHShare

certificatesof1,000,000ormoreOferSharesisuedunderyourowname,youmaycolectyour

HSharecertificatesfromtheHShareRegistrar’soficeaftertheSevereWeatherSignalislowered

orcanceled(e.g.intheafternonofTuesday,August19,2025oronWednesday,August20,

2025).

ProspectiveinvestorshouldbeawarethatiftheychosetoreceivephysicalHShare

certificatesisuedintheirowname,theremaybeadelayinreceivingtheHShare

certificates.

F.ADMISIONOFTHEHSHARESINTOCAS

IftheStockExchangegrantsthelistingof,andpermisiontodealin,theHSharesonthe

StockExchangeandtheCompanycomplieswiththestockadmisionrequirementsofHKSC,the

HShareswilbeaceptedaseligiblesecuritiesbyHKSCfordeposit,clearanceandsetlementin

CASwithefectfromthedateofcomencementofdealingsintheHSharesontheStock

ExchangeoranyotherdateHKSCchoses.SetlementoftransactionsbetwenExchange

ParticipantsisrequiredtotakeplaceinCASonthesecondsetlementdayafteranytradingday.

AlactivitiesunderCASaresubjectotheGeneralRulesofHKSCandtheHKSC

OperationalProceduresinefectfromtimetotime.

AlnecesaryarangementshavebenmadenablingtheHSharestobeadmitedinto

CAS.

Youshouldsektheadviceofyourbrokerorotherprofesionaladvisorfordetailsofthe

setlementarangementasucharangementsmayafectyourightsandinterests.

G.PERSONALDATA

ThefolowingPersonalInformationColectionStatementapliestoanypersonaldata

colectedandheldbytheCompany,theHShareRegistrar,thereceivingbanksandtheRelevant

Personsaboutyouinthesamewayasitapliestopersonaldataboutaplicantsotherthan

HKSCNomines.Thispersonaldatamayincludeclientidentifier(s)andyouridentification

information.BygivingaplicationinstructionstoHKSC,youacknowledgethatyouhaveread,

understodandagretoalofthetermsofthePersonalInformationColectionStatementbelow.

HOWTOAPLYFORHONGKONGOFERSHARES

---

1.PersonalInformationColectionStatement

ThisPersonalInformationColectionStatementinformstheaplicantfor,andholderof,

HongKongOferShares,ofthepoliciesandpracticesoftheCompanyandtheHShareRegistrar

inrelationtopersonaldatandthePersonalData(Privacy)Ordinance(Chapter486oftheLawsof

HongKong).

2.Reasonsforthecolectionofyourpersonaldata

ItisnecesaryforaplicantsandregisteredholdersofHongKongOferSharestoensurethat

personaldatasupliedtotheCompanyoritsagentsandtheHShareRegistrarisacurateand

up-to-datewhenaplyingforHongKongOferSharesortransferingHongKongOferShares

intoroutoftheirnamesorinprocuringtheservicesoftheHShareRegistrar.

Failuretosuplytherequestedataorsuplyinginacuratedatamayresultinyour

aplicationforHongKongOferSharesbeingrejected,orinthedelayortheinabilityofthe

CompanyortheHShareRegistrartoefectransfersorotherwiserendertheirservices.Itmay

alsopreventordelayregistrationortransfersofHongKongOferShareswhichyouhave

sucesfulyapliedforand/orthedespatchofHSharecertificate(s)towhichyouarentitled.

ItisimportanthataplicantsforandholdersofHongKongOferSharesinformthe

CompanyandtheHShareRegistrarimediatelyofanyinacuraciesinthepersonaldatasuplied.

3.Purposes

Yourpersonaldatamaybeused,held,procesed,and/orstored(bywhatevermeans)forthe

folowingpurposes:

(cid:129)procesingyouraplicationandrefundcheckandWhiteForme-Refundpayment

instruction(s),whereaplicable,verificationofcompliancewiththetermsand

aplicationproceduresetoutinthisprospectusandanouncingresultsofalocationof

HongKongOferShares;

(cid:129)compliancewithaplicablelawsandregulationsinHongKongandelsewhere;

(cid:129)registeringnewisuesortransfersintoroutofthenamesoftheholdersoftheH

Sharesincluding,whereaplicable,HKSCNomines;

(cid:129)maintainingorupdatingtheregisterofmembersoftheCompany;

HOWTOAPLYFORHONGKONGOFERSHARES

---

(cid:129)verifyingidentitiesofaplicantsforandholdersoftheHSharesandidentifyingany

duplicateaplicationsfortheHShares;

(cid:129)facilitatingHongKongOferSharesbaloting;

(cid:129)establishingbenefitentitlementsofholdersoftheHShares,suchasdividends,rights

isues,bonusisues,etc.;

(cid:129)distributingcomunicationsfromtheCompanyanditsubsidiaries;

(cid:129)compilingstatisticalinformationandprofilesoftheholderoftheHShares;

(cid:129)disclosingrelevantinformationtofacilitateclaimsonentitlements;and

(cid:129)anyotherincidentalorasociatedpurposesrelatingtotheaboveand/ortoenablethe

CompanyandtheHShareRegistrartodischargetheirobligationstoaplicantsand

holdersoftheHSharesand/oregulatorsand/oranyotherpurposestowhichaplicants

andholdersoftheHSharesmayfromtimetotimeagre.

4.Transferofpersonaldata

PersonaldataheldbytheCompanyandtheHShareRegistrarelatingtotheaplicantsfor

andholdersofHongKongOferShareswilbekeptconfidentialbutheCompanyandtheH

ShareRegistrarmay,tothextentnecesaryforachievinganyoftheabovepurposes,disclose,

obtainortransfer(whetherwithinoroutsideHongKong)thepersonaldatato,fromorwithanyof

thefolowing:

(cid:129)theCompany’sapointedagentsuchasfinancialadvisers,receivingbanksand

overseasprincipalshareregistrar;

(cid:129)HKSCorHKSCNomines,whowilusethepersonaldatandmaytransferthe

personaldatatotheHShareRegistrarforthepurposesofprovidingitservicesor

facilitiesorperformingitsfunctionsinacordancewithitsrulesorproceduresand

operatingFINIandCAS(includingwhereaplicantsfortheHongKongOferShares

requestadepositintoCAS);

(cid:129)anyagents,contractorsorthird-partyserviceproviderswhoferadministrative,

telecomunications,computer,paymentorotherservicestotheCompanyortheH

ShareRegistrarinconectionwiththeirespectivebusinesoperations;

HOWTOAPLYFORHONGKONGOFERSHARES

---

(cid:129)theStockExchange,theSFCandanyotherstatutoryregulatoryorgovernmentalbodies

orotherwiseasrequiredbylaws,rulesoregulations,includingforthepurposeofthe

StockExchange’sadministrationoftheListingRulesandtheSFC’sperformanceofits

statutoryfunctions;and

(cid:129)anypersonsorinstitutionswithwhichtheholdersofHongKongOferShareshaveor

proposetohavedealings,suchastheirbankers,solicitors,acountantsorbrokersetc.

5.Retentionofpersonaldata

TheCompanyandtheHShareRegistrarwilkepthepersonaldataoftheaplicantsand

holdersofHongKongOferSharesforaslongasnecesarytofulfilthepurposesforwhichthe

personaldatawascolected.Personaldatawhichisnolongerequiredwilbedestroyedordealt

withinacordancewiththePersonalData(Privacy)Ordinance(Chapter486oftheLawsofHong

Kong).

6.Acestoandcorectionofpersonaldata

AplicantsforandholdersofHongKongOferShareshavetherightoascertainwhetherthe

CompanyortheHShareRegistrarholdstheirpersonaldata,tobtainacopyofthatdata,andto

corectanydatathatisinacurate.TheCompanyandtheHShareRegistrarhavetherighto

chargeareasonablefefortheprocesingofsuchrequests.Alrequestsforacestodataor

corectionofdatashouldbeadresedtotheCompanyandtheHShareRegistrar,atheir

registeredadresdisclosedinthesectionheaded“CorporateInformation”inthisprospectusoras

notifiedfromtimetotime,fortheatentionofthecompanysecretary,ortheHShareRegistrarfor

theatentionoftheprivacycomplianceoficer.

HOWTOAPLYFORHONGKONGOFERSHARES

---

Thefolowingisthetextofareport,preparedforthesolepurposeofinclusioninthis

documentreceivedfromtheindependentreportingacountantsoftheCompany,BDOLimited,

CertifiedPublicAcountants,HongKong.

Tel : +852 2218 8288

Fax : +852 2543 1051

w.bdo.com.hk

(cid:26373)(cid:23453) : +852 2218 8288

(cid:10178)(cid:2353) : +852 2543 1051

w.bdo.com.hk

th

Flor Wing On Centre

111 Conaught Road Central

Hong Kong

(cid:3034)(cid:2196)(cid:1652)(cid:23593)(cid:2867)(cid:1048)111(cid:22457)

(cid:2123)(cid:1549)(cid:1048)(cid:1718)25(cid:15779)

ACOUNTANTS’REPORTONHISTORICALFINANCIALINFORMATIONTOTHE

DIRECTORSOFSICO.,LTD.ANDCHINAINTERNATIONALCAPITAL

CORPORATIONHONGKONGSECURITIESLIMITEDANDCITICSECURITIES(HONG

KONG)LIMITED

INTRODUCTION

WereportonthehistoricalfinancialinformationofSICo.,Ltd.(the“Company”)andits

subsidiaries(togetherthe“Group”)setoutonpagesI-5toI-118,whichcomprisesthe

consolidatedstatementsofprofitorlosandothercomprehensiveincome,statementsofchangesin

equityandstatementsofcashflowsoftheGroupforeachoftheyearended31December2022,

2023,and2024andthethremonthsended31March2025(the“RelevantPeriods”),andthe

consolidatedstatementsofinancialpositionoftheGroupandthestatementsofinancialposition

oftheCompanyasat31December2022,2023and2024and31March2025andmaterial

acountingpolicyinformationandotherexplanatoryinformation(together,the“Historical

FinancialInformation”).TheHistoricalFinancialInformationformsanintegralpartofthis

report,whichasbenpreparedforinclusionintheprospectusoftheCompanydated11August

2025(the“Prospectus”)inconectionwiththeinitialistingofsharesoftheCompanyonthe

MainBoardofTheStockExchangeofHongKongLimited(the“StockExchange”).

DIRECTORS’RESPONSIBILITYFORTHEHISTORICALFINANCIALINFORMATION

ThedirectorsoftheCompanyareresponsibleforthepreparationofHistoricalFinancial

Informationthatgivesatrueandfairviewinacordancewiththebasisofpreparationsetoutin

Note2totheHistoricalFinancialInformation,andforsuchinternalcontrolasthedirectors

determineisnecesarytoenablethepreparationofHistoricalFinancialInformationthatisfre

fromaterialmistatement,whetherduetofraudoreror.

APENDIXIACOUNTANTS’REPORT

–I-1–

---

REPORTINGACOUNTANTS’RESPONSIBILITY

OuresponsibilityistoexpresanopinionontheHistoricalFinancialInformationandto

reportouropiniontoyou.WeconductedourworkinacordancewithHongKongStandardon

InvestmentCircularReportingEngagements200“Acountants’ReportsonHistoricalFinancial

InformationinInvestmentCirculars”isuedbytheHongKongInstituteofCertifiedPublic

Acountants(“HKICPA”).Thistandardrequiresthatwecomplywithethicalstandardsandplan

andperformourworktobtainreasonableasuranceaboutwhethertheHistoricalFinancial

Informationisfrefromaterialmistatement.

Ourworkinvolvedperformingprocedurestobtainevidenceaboutheamountsand

disclosuresintheHistoricalFinancialInformation.Theprocedureselectedependonthe

reportingacountants’judgement,includingtheasesmentofrisksofmaterialmistatementofthe

HistoricalFinancialInformation,whetherduetofraudoreror.Inmakingthoseriskasesments,

thereportingacountantsconsiderinternalcontrolrelevantothentity’spreparationofHistorical

FinancialInformationthatgivesatrueandfairviewinacordancewiththebasisofpreparation

setoutinNote2totheHistoricalFinancialInformationinordertodesignproceduresthatare

apropriateinthecircumstances,butnotforthepurposeofexpresinganopiniononthe

efectivenesofthentity’sinternalcontrol.Ourworkalsoincludedevaluatingtheapropriatenes

ofacountingpoliciesusedandthereasonablenesofacountingestimatesmadebythedirectors,

aswelasevaluatingtheoveralpresentationoftheHistoricalFinancialInformation.

Webelievethathevidencewehaveobtainedisuficientandapropriatetoprovideabasis

forouropinion.

OPINION

Inouropinion,theHistoricalFinancialInformationgives,forthepurposesofthe

acountants’report,atrueandfairviewoftheGroup’sandtheCompany’sfinancialpositionasat

31December2022,2023and2024and31March2025andoftheGroup’sfinancialperformance

andcashflowsfortheRelevantPeriodsinacordancewiththebasisofpreparationsetoutinNote

2totheHistoricalFinancialInformation.

APENDIXIACOUNTANTS’REPORT

–I-2–

---

REVIEWOFSTUBPERIODCOMPARATIVEHISTORICALFINANCIALINFORMATION

WehavereviewedthestubperiodcomparativehistoricalfinancialinformationoftheGroup

whichcomprisestheconsolidatedstatementofprofitorlosandothercomprehensiveincome,

consolidatedstatementofchangesinequityandconsolidatedstatementofcashflowsforthethre

monthsended31March2024,andotherexplanatoryinformation(together,the“StubPeriod

ComparativeHistoricalFinancialInformation”).ThedirectorsoftheCompanyareresponsible

forthepreparationoftheStubPeriodComparativeHistoricalFinancialInformationinacordance

withthebasisofpreparationsetoutinNote2totheHistoricalFinancialInformation.Our

responsibilityistoexpresaconclusionontheStubPeriodComparativeHistoricalFinancial

Informationbasedonoureview.WeconductedoureviewinacordancewithInternational

StandardonReviewEngagements2410ReviewofInterimFinancialInformationPerformedbythe

IndependentAuditoroftheEntityisuedbytheInternationalAuditingandAsuranceStandards

Board(“IASB”).Areviewconsistsofmakinginquiries,primarilyofpersonsresponsiblefor

financialandacountingmaters,andaplyinganalyticalandothereviewprocedures.Areviewis

substantialylesinscopethananauditconductedinacordancewithInternationalStandardson

Auditingandconsequentlydoesnotenableustobtainasurancethatwewouldbecomeawareof

alsignificantmatersthatmightbeidentifiedinanaudit.Acordingly,wedonotexpresanaudit

opinion.Basedonoureview,nothinghascometouratentionthatcausesustobelievethathe

StubPeriodComparativeHistoricalFinancialInformation,forthepurposesoftheacountants’

report,isnotprepared,inalmaterialrespects,inacordancewiththebasisofpreparationsetout

inNote2totheHistoricalFinancialInformation.

APENDIXIACOUNTANTS’REPORT

–I-3–

---

REPORTONMATERSUNDERTHERULESGOVERNINGTHELISTINGOF

SECURITIESONTHESTOCKEXCHANGEOFHONGKONGLIMITEDANDTHE

COMPANIES(WINDINGUPANDMISCELANEOUSPROVISIONS)ORDINANCE

Adjustments

InpreparingtheHistoricalFinancialInformation,noadjustmentstotheUnderlyingFinancial

StatementsasdefinedonpageI-5havebenmade.

Dividends

Werefertonote16totheHistoricalFinancialInformationwhichstatesthatnodividends

havebenpaidbytheCompanyinrespectoftheRelevantPeriods.

BDOLimited

CertifiedPublicAcountants

ChanWingFai

PractisingCertificateno.P05443

HongKong

11August2025

APENDIXIACOUNTANTS’REPORT

–I-4–

---

I.HISTORICALFINANCIALINFORMATIONOFTHEGROUP

PreparationofHistoricalFinancialInformation

SetoutbelowistheHistoricalFinancialInformationwhichformsanintegralpartofthis

acountants’report.

TheconsolidatedfinancialstatementsoftheGroupfortheRelevantPeriods,onwhichthe

HistoricalFinancialInformationisbased,havebenpreparedinacordancewiththeacounting

policieswhichconformwithIFRSAcountingStandardsisuedbyInternationalAcounting

StandardsBoard(the“IASB”)andwereauditedbyusinacordancewithInternationalStandards

onAuditingisuedbytheIASB(“UnderlyingFinancialStatements”).

TheHistoricalFinancialInformationispresentedinRenminbi(“RMB”)andalvaluesare

roundedtothenearesthousand(RMB’000)exceptwhenotherwiseindicated.

APENDIXIACOUNTANTS’REPORT

–I-5–

---

CONSOLIDATEDSTATEMENTSOFPROFITORLOSANDOTHERCOMPREHENSIVE

INCOME

Yearended31DecemberThremonthsended31March

Notes20222023202420242025

RMB’000RMB’000RMB’000RMB’000RMB’000

(Unaudited)

Revenue

.

6417,0351,250,6961,768,141426,068407,961

Costofsales

.

(449,987)(1,068,660)(1,332,688)(334,322)(315,521)

Gros(los)/profit

.

(32,952)182,036435,45391,74692,440

Otherincome

.

2,08251760737168

Othergainsandloses,net

.

751,53354,85288,94523,72017,985

Netinvestmentincome/(expense)

.

836,22723,268762917(215)

Reversalof/(provisionfor)

impairmentlosesonfinancial

asets

.

91,057(10,972)(10,166)(2,828)1,038

Selingexpenses

.

(13,931)(20,427)(28,827)(4,057)(5,301)

Administrativexpenses

.

(111,531)(163,295)(189,438)(45,047)(52,283)

Researchandevelopmentexpenses

.

(127,560)(137,210)(141,845)(22,283)(44,938)

Financeincome/(expense),net

.

1018,13515,2205,9043,144(2,032)

Shareofresultsofasociates

.

18—(148)(2,131)164(1,502)

(Los)/profitbeforetax

.

(176,940)(56,159)159,26445,5135,360

Incometaxcredit

.

121,25810,43919,7615873,158

(Los)/profitfortheyear/period

.

(175,682)(45,720)179,02546,1008,518

Othercomprehensiveincomefor

theyear/period

Itemsthatmaybereclasified

subsequentlytoprofitorlos:

Exchangediferencesarisingfrom

translationoforeignoperations

.

212(1,722)(2,522)(1,119)1,790

Totalcomprehensiveincomefor

theyear/period

.

(175,470)(47,442)176,50344,98110,308

(Los)/earningspershare

Basic(RMB)

.

15(0.41)(0.11)0.420.110.02

Diluted(RMB)

.

15(0.41)(0.11)0.420.110.02

APENDIXIACOUNTANTS’REPORT

–I-6–

---

CONSOLIDATEDSTATEMENTSOFINANCIALPOSITION

Asat31DecemberAsat31March

Notes2022202320242025

RMB’000RMB’000RMB’000RMB’000

Non-curentasets

Property,plantandequipment

.

192,215,7113,638,8083,747,1683,712,980

Right-of-useasets

.

21251,993281,445265,451261,380

Intangibleasets

.

206,5969,94317,85716,290

Financialasetsatfairvalue

throughprofitorlos

.

232,8052,1552,0931,877

Investmentinasociates

.

18—26,59326,89925,397

Deferedtaxasets

.

2243,63937,42859,93364,207

Othernon-curentasets

.

2418,416111,114112,651116,852

Totalnon-curentasets

.

2,539,1604,107,4864,232,0524,198,983

Curentasets

Tradeandothereceivables

.

25176,337393,175575,837555,783

Prepayment

.

2558,719143,54339,06296,824

Inventories

.

27533,279843,2771,021,8761,032,852

Othercurentasets

.

2871,556119,165248,680189,858

Financialasetsatfairvalue

throughprofitorlos

.

231,789,327274,959—

Cashandbankbalances

.

26684,8481,029,7481,239,1981,474,766

Totalcurentasets

.

3,314,0662,803,8673,124,6533,350,083

Totalasets

.

5,853,2266,911,3537,356,7057,549,066

Curentliabilities

Tradeandotherpayables

.

29231,8761,148,427842,648812,876

Contractliabilities

.

3022,36099,31845,15040,248

Borowings

.

31—3,150609,263655,742

Taxpayables

.

49,23532,29532,92132,009

Othercurentliabilities

.

8,78320,5098,8329,245

Leaseliabilities

.

32704453,9613,078

Totalcurentliabilities

.

312,9581,303,7441,542,7751,553,198

Netcurentasets

.

3,001,1081,500,1231,581,8781,796,885

Totalasetslescurent

liabilities

.

5,540,2685,607,6095,813,9305,995,868

APENDIXIACOUNTANTS’REPORT

–I-7–

---

Asat31DecemberAsat31March

Notes2022202320242025

RMB’000RMB’000RMB’000RMB’000

Non-curentliabilities

Borowings

.

31—85,737265,000

Leaseliabilities

.

323,24415,351—

Contractliabilities

.

30—44,10444,104

Othernon-curentliabilities

.

—5,7345,733

Deferedincome

.

33286,560365,745365,373352,547

Totalnon-curentliabilities

.

289,804381,096500,948667,384

NETASETS

.

5,250,4645,226,5135,312,9825,328,484

Capitalandreserves

Equityatributabletownersof

theCompany

Sharecapital

.

34429,711429,711429,711429,711

Capitalreserve

.

5,064,6485,088,1395,098,3485,103,542

Treasuryshares

.

35—(100,243)(100,243)

Surplusreserve

.

368,3438,34312,76112,761

Exchangereserve

.

(380)(2,102)(4,624)(2,834)

Acumulatedloses

.

(251,858)(297,578)(122,971)(114,453)

TOTALEQUITY

.

5,250,4645,226,5135,312,9825,328,484

APENDIXIACOUNTANTS’REPORT

–I-8–

---

CONSOLIDATEDSTATEMENTSOFCHANGESINEQUITY

AtributabletownersoftheCompany

Sharecapital

(note34)

Capitalreserve

(note36)

Surplus

reserve

(note36)

Exchange

reserve

(note36)

Acumulated

loses

(note36)Total

RMB’000RMB’000RMB’000RMB’000RMB’000RMB’000

Balanceat1January2022

.

386,7401,903,9458,343(592)(76,176)2,222,260

Losfortheyear

.

—(175,682)(175,682)

Exchangediferencesarisingfrom

translationoforeignoperations

.

—212—212

Totalcomprehensivelos

fortheyear

.

—212(175,682)(175,470)

Isuanceofnewshares

.

42,9713,160,703—3,203,674

Balanceat31December2022

.

429,7115,064,6488,343(380)(251,858)5,250,464

Balanceat1January2023

.

429,7115,064,6488,343(380)(251,858)5,250,464

Losfortheyear

.

—(45,720)(45,720)

Exchangediferencesarisingfrom

translationoforeignoperations

.

—(1,722)—(1,722)

Totalcomprehensiveincome

fortheyear

.

—(1,722)(45,720)(47,442)

Others(note36)

.

—23,491—23,491

Balanceat31December2023

.

429,7115,088,1398,343(2,102)(297,578)5,226,513

AtributabletownersoftheCompany

Sharecapital

(note34)

Treasury

shares

(note35)

Capital

reserve

(note36)

Surplus

reserve

(note36)

Exchange

reserve

(note36)

Acumulated

loses

(note36)Total

RMB’000RMB’000RMB’000RMB’000RMB’000RMB’000RMB’000

Balanceat1January2024

.

429,711—5,088,1398,343(2,102)(297,578)5,226,513

Profitfortheyear

.

—179,025179,025

Exchangediferencesarisingfrom

translationoforeignoperations

.

—(2,522)—(2,522)

Totalcomprehensiveincome

fortheyear

.

—(2,522)179,025176,503

Transferedtosurplusreserve

.

—4,418—(4,418)—

Recognitionofshare-based

payments(note40)

.

—10,209—10,209

Repurchaseofshares(note35)

.

—(100,243)—(100,243)

Balanceat31December2024

.

429,711(100,243)5,098,34812,761(4,624)(122,971)5,312,982

APENDIXIACOUNTANTS’REPORT

–I-9–

---

AtributabletownersoftheCompany

Sharecapital

(note34)

Treasury

shares

(note35)

Capital

reserve

(note36)

Surplus

reserve

(note36)

Exchange

reserve

(note36)

Acumulated

loses

(note36)Total

RMB’000RMB’000RMB’000RMB’000RMB’000RMB’000RMB’000

Balanceat1January2024

.

429,711—5,088,1398,343(2,102)(297,578)5,226,513

Profitfortheperiod

.

—46,10046,100

Exchangediferencesarisingfrom

translationoforeignoperations

.

—(1,119)—(1,119)

Totalcomprehensiveincomeforthe

period

.

—(1,119)46,10044,981

Repurchaseofshares(note35)

.

—(53,028)—(53,028)

Balanceat31March2024

(Unaudited)

.

429,711(53,028)5,088,1398,343(3,221)(251,478)5,218,466

AtributabletownersoftheCompany

Sharecapital

(note34)

Treasury

shares

(note35)

Capital

reserve

(note36)

Surplus

reserve

(note36)

Exchange

reserve

(note36)

Acumulated

loses

(note36)Total

RMB’000RMB’000RMB’000RMB’000RMB’000RMB’000RMB’000

Balanceat1January2025

.

429,711(100,243)5,098,34812,761(4,624)(122,971)5,312,982

Profitfortheperiod

.

—8,5188,518

Exchangediferencesarisingfrom

translationoforeignoperations

.

—1,790—1,790

Totalcomprehensiveincomeforthe

period

.

—1,7908,51810,308

Recognitionofshare-based

payments(note40)

.

—5,194—5,194

Balanceat31March2025

.

429,711(100,243)5,103,54212,761(2,834)(114,453)5,328,484

APENDIXIACOUNTANTS’REPORT

–I-10–

---

CONSOLIDATEDSTATEMENTSOFCASHFLOWS

Yearended31DecemberThremonthsended31March

Notes20222023202420242025

RMB’000RMB’000RMB’000RMB’000RMB’000

(Unaudited)

Operatingactivities

(Los)/profitbeforetax

.

(176,940)(56,159)159,26445,5135,360

Adjustmentsfor:

Depreciationandamortisation

.

11146,108226,754358,42385,67694,063

Los/(gain)ondisposal/writenof

ofproperty,plantandequipment

.

71346(403)(105)—

Interestincomefrombankdeposits

.

10(18,262)(15,437)(14,239)(3,297)(3,921)

Earlyterminationoflease

.

7—(79)(63)—

Interestexpenses

.

101272178,3351535,953

Shareofresultsofasociates

.

18—1482,131(164)1,502

Share-basedpaymentexpenses

.

40—10,209—5,194

Changeinfairvalueofinancial

asetsatFVTPL

.

8(36,227)(23,268)(762)(917)215

(Reversalof)/provisionfor

impairmentlosesunderexpected

creditloses(“ECL”)model

.

9(1,057)10,97210,1662,828(1,038)

Writendownofinventories

.

118,95615,74322,4351,6645,260

Operatingcashflowsbefore

movementsinworkingcapital

.

(77,294)159,237555,496131,351112,588

Increaseininventories

.

(156,661)(325,741)(200,629)(161,490)(16,236)

Decrease/(increase)intradeand

othereceivables

.

21,121(226,715)(188,447)(48,011)24,633

(Increase)/decreaseinprepayments

.

(46,710)(84,824)33,63542,225(59,070)

Decrease/(increase)inothercurent

asets

.

1,083(47,609)(126,766)(58,300)59,750

(Increase)/decreaseinrestricted

cash

.

(8,063)(197,747)136,988(76,693)7,048

Increase/(decrease)intradeand

otherpayables

.

137,227553,371(137,336)113,73331,603

Increase/(decrease)incontract

liabilities

.

19,86576,958(10,064)3,013(4,902)

Increase/(decrease)inothercurent

liabilities

.

8,78311,726(5,943)21,706412

Increase/(decrease)indefered

income

.

17,257(1,913)(35,872)(50,730)(12,826)

APENDIXIACOUNTANTS’REPORT

–I-11–

---

Yearended31DecemberThremonthsended31March

Notes20222023202420242025

RMB’000RMB’000RMB’000RMB’000RMB’000

(Unaudited)

Cash(usedin)/generatedfrom

operations

.

(83,392)(83,257)21,062(83,196)143,000

Interestreceived

.

18,26215,43714,2393,2973,921

Incometaxesrefunded/(paid)

.

709(290)(4,867)(1,437)(2,956)

Netcash(usedin)/generatedfrom

inoperatingactivities

.

(64,421)(68,110)30,434(81,336)143,965

Investingactivities

Investmentinanasociate

.

—(3,250)—(2,842)

Procedsfromdisposalofproperty,

plantandequipment

.

—1492,096184—

Purchaseofproperty,plantand

equipment,intangibleasetsand

right-of-useasets

.

(1,034,031)(1,395,236)(567,941)(235,310)(121,184)

Investmentinfinancialasets

measuredatFVTPL

.

(2,320,000)(1,470,000)—

Redemptionofinancialasets

measuredatFVTPL

.

566,9573,008,286275,783275,783—

Deferedincomereceivedrelatedto

asets

.

5,62081,09835,50048,174—

Placementofrestrictedeposits

.

(2,290)(21,810)(13,217)—

Redemptionofrestrictedeposits

.

9,0505,33310,642—3,992

Netcash(usedin)/generatedfrom

investingactivities

.

(2,774,694)204,570(257,137)88,831(120,034)

APENDIXIACOUNTANTS’REPORT

–I-12–

---

Yearended31DecemberThremonthsended31March

Notes20222023202420242025

RMB’000RMB’000RMB’000RMB’000RMB’000

(Unaudited)

Financingactivities

Procedsfrombankborowings

.

—3,150700,000100,000325,742

Repaymentfrombankborowings

.

—(8,150)(3,150)(100,000)

Repaymentofprincipaloflease

liabilities

.

(4,480)(7,340)(12,746)(3,602)(883)

Interestpaid

.

(127)(217)(7,797)(153)(5,610)

Placementofrestrictedeposits

.

—(1,575)—

Isuanceofshares

.

3,183,351—

Paymentforepurchaseofshares

.

—(100,243)(53,028)—

Netcashgeneratedfrom/(usedin)

financingactivities

.

3,178,744(5,982)571,06440,067219,249

Netincreaseincashandcash

equivalents

.

339,629130,478344,36147,562243,180

Cashandcashequivalentsat

beginingofyear/period

.

342,586682,492811,593811,5931,155,456

Efectofexchangeratechanges

.

277(1,377)(498)8903,428

Cashandcashequivalentsathe

endofyear/period,represented

bybankbalancesandcash

.

682,492811,5931,155,456860,0451,402,064

APENDIXIACOUNTANTS’REPORT

–I-13–

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STATEMENTSOFINANCIALPOSITIONOFTHECOMPANY

Asat31DecemberAsat31March

Notes2022202320242025

RMB’000RMB’000RMB’000RMB’000

Non-curentasets

Property,plantandequipment

.

191,326,7781,286,3671,244,4461,227,529

Right-of-useasets

.

21171,670174,754166,697164,883

Intangibleasets

.

206,5969,94311,0779,959

Investmentinsubsidiaries

.

17434,213434,213474,3941,026,105

Investmentinanasociate

.

18—26,59324,07322,959

Deferedtaxasets

.

2220,83530,42240,88841,573

Othernon-curentasets

.

2418,41620,3226,9027,202

Financialasetsatfairvalue

throughprofitorlos

.

232,8052,1552,0931,877

Totalnon-curentasets

.

1,981,3131,984,7691,970,5702,502,087

Curentasets

Tradeandothereceivables

.

25683,8102,847,6684,094,8063,450,147

Prepayment

.

2551,399148,5813,02713,145

Inventories

.

27516,167418,172406,458375,308

Othercurentasets

.

288,33313,40058,51071,721

Financialasetsatfairvalue

throughprofitorlos

.

231,789,327274,959—

Cashandbankbalances

.

26640,070810,989850,9661,072,105

Totalcurentasets

.

3,689,1064,513,7695,413,7674,982,426

Totalasets

.

5,670,4196,498,5387,384,3377,484,513

Curentliabilities

Tradeandotherpayables

.

29120,733827,5231,092,580981,043

Contractliabilities

.

3022,36099,31844,83952,451

Borowings

.

31—559,263586,558

Incometaxpayables

.

30,96330,96330,96330,963

Othercurentliabilities

.

8,78320,5098,7929,244

Leaseliabilities

.

32—1,8851,907

Totalcurentliabilities

.

182,839978,3131,738,3221,662,166

Netcurentasets

.

3,506,2673,535,4563,675,4453,320,260

Totalasetslescurent

liabilities

.

5,487,5805,520,2255,646,0155,822,347

APENDIXIACOUNTANTS’REPORT

–I-14–

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Asat31DecemberAsat31March

Notes2022202320242025

RMB’000RMB’000RMB’000RMB’000

Non-curentliabilities

Borowings

.

31—85,737265,000

Leaseliabilities

.

32—7,427—

Contractliabilities

.

30—44,10444,104

Othernon-curentliabilities

.

—5,7345,734

Deferedincome

.

33193,825195,910174,732166,117

Totalnon-curentliabilities

.

193,825203,337310,307480,955

NETASETS

.

5,293,7555,316,8885,335,7085,341,392

Capitalandreserves

Equityatributabletownersof

theCompany

Sharecapital

.

34429,711429,711429,711429,711

Capitalreserve

.

364,920,0204,943,5114,953,7204,958,914

Treasuryshares

.

35—(100,243)(100,243)

Surplusreserve

.

368,3438,34312,76112,761

(Acumulatedloses)/retained

earnings

.

36(64,319)(64,677)39,75940,249

TOTALEQUITY

.

5,293,7555,316,8885,335,7085,341,392

APENDIXIACOUNTANTS’REPORT

–I-15–

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INOTESTOHISTORICALFINANCIALINFORMATION

1.GENERALINFORMATION

TheCompanywasestablishedinthePeople’sRepublicofChina(the“PRC”)onNovember

2010.InJanuary2022,theCompany’shareswerelistedontheSci-Techinovationboardofthe

ShanghaiStockExchangewithstockcode688234.Itsregisteredoficeandtheprincipalplaceof

businesactivitiesislocatedatNo.99,SouthTianyueRoad,HuaiyinDistrict,JinanCity,

ShandongProvince,PRC.

TheGroupandtheCompanyisprincipalyengagedinresearchandevelopment,

manufacturingandsalesofSiCsubstratesduringtheRelevantPeriods.

Mr.ZongYanministhecontrolingshareholderoftheCompany.

2.BASISOFPREPARATIONOFHISTORICALFINANCIALINFORMATION

TheHistoricalFinancialInformationhasbenpreparedbasedontheacountingpolicieset

outinNote4whichconformwithalaplicableIFRSAcountingStandardswhichcolectiveterm

includesalaplicableindividualInternationalFinancialReportingStandards,International

AcountingStandardsandInterpretationsisuedbyInternationalAcountingStandardsBoard

(“IASB”).Inadition,theHistoricalFinancialInformationalsocomplieswithincludesthe

aplicabledisclosuresrequirementsoftheHongKongCompaniesOrdinanceandtheRules

GoverningtheListingofSecuritiesontheStockExchangeofHongKongLimited(the“Stock

Exchange”).

TheIASBhasisuedanumberofnewandrevisedIFRSs.Forthepurposeofpreparingthe

HistoricalFinancialInformation,theGrouphasadoptedtheacountingpolicieswhichconform

withalaplicablenewandrevisedIFRSAcountingStandardsthatarefectiveduringthe

RelevantPeriods,consistentlythroughoutheRelevantPeriods.

APENDIXIACOUNTANTS’REPORT

–I-16–

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3.APLICATIONOFNEWANDREVISEDIFRSACOUNTINGSTANDARDS

Athedateofthisreport,newstandardandamendmentstoIFRSAcountingStandardsthat

havebenisuedbutarenotefectiveandhavenotbenearlyadoptedbytheGroup:

NewandamendmentstoIFRSAcountingStandardsisuedbutnotyetefective

AmendmentstoIFRS9andIFRS7AmendmentstotheClasificationandMeasurementof

FinancialInstruments

AmendmentstoIFRS9andIFRS7ContractsReferencingNature-dependentElectricity

AmendmentstoIFRSAcounting

Standards

AnualImprovementoIFRSAcountingStandards—

Volume11

IFRS18PresentationandDisclosureinFinancialStatements

IFRS19SubsidiarieswithoutPublicAcountability:Disclosures

AmendmentstoIFRS10andIAS28SaleorContributionofAsetsbetwenanInvestorand

itsAsociateorJointVenture

Efectiveforanualperiodsbeginingonorafter1January2026.

Efectiveforanualperiodsbeginingonorafter1January2027.

Efectiveforanualperiodsbeginingonorafteradatetobedetermined.

TheGroupisintheprocesofmakinganasesmentoftheimpactofthesenewand

amendedIFRSAcountingStandardsuponinitialaplication.IFRS18introducesnew

requirementsonpresentationwithinthestatementofprofitorlos,includingspecifiedtotalsand

subtotals.Italsorequiresdisclosureofmanagement-definedperformancemeasuresinanoteand

includesnewrequirementsforagregationandisagregationofinancialinformation.Thenew

requirementsarexpectedtoimpactheGroup’spresentationinthestatementofprofitorlosand

disclosuresoftheGroup’sfinancialperformance.Sofar,theGroupconsidersthatnewand

amendedstandardsareunlikelytohaveasignificantimpactontheGroup’sresultsofoperations

andfinancialposition.

APENDIXIACOUNTANTS’REPORT

–I-17–

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4.MATERIALACOUNTINGPOLICIES

TheHistoricalFinancialInformationhasbenpreparedonthehistoricalcostbasisexceptfor

certainfinancialinstrumentsthataremeasuredatfairvaluesathendofeachreportingperiod,as

explainedintheacountingpoliciesetoutbelow.Historicalcostisgeneralybasedonthefair

valueoftheconsiderationgiveninexchangeforgodsandservices.

Fairvalueisthepricethatwouldbereceivedtoselanasetorpaidtotransferaliabilityin

anorderlytransactionbetwenmarketparticipantsathemeasurementdate,regardlesofwhether

thatpriceisdirectlyobservableorestimatedusinganothervaluationtechnique.Inestimatingthe

fairvalueofanasetoraliability,theGrouptakesintoacounthecharacteristicsoftheasetor

liabilityifmarketparticipantswouldtakethosecharacteristicsintoacountwhenpricingtheaset

orliabilityathemeasurementdate.

Inadition,forfinancialreportingpurposes,fairvaluemeasurementsarecategorisedinto

Level1,2or3basedonthedegretowhichtheinputstothefairvaluemeasurementsare

observableandthesignificanceoftheinputstothefairvaluemeasurementinitsentirety,which

aredescribedasfolows:

(cid:129)Level1inputsarequotedprices(unadjusted)inactivemarketsforidenticalasetsor

liabilitiesthathentitycanacesathemeasurementdate;

(cid:129)Level2inputsareinputs,otherthanquotedpricesincludedwithinLevel1,thatare

observablefortheasetorliability,eitherdirectlyorindirectly;and

(cid:129)Level3inputsareunobservableinputsfortheasetorliability.Theprincipalacounting

policiesaresetoutbelow.

(a)Basisofconsolidation

TheHistoricalFinancialInformationincorporatesthefinancialstatementsoftheCompany

anditsubsidiaries.ControlisachievedwhentheCompany:

(cid:129)haspowerovertheinveste;

(cid:129)isexposed,orhasrights,tovariablereturnsfromitsinvolvementwiththeinveste;and

(cid:129)hastheabilitytouseitspowertoafectitsreturns.

APENDIXIACOUNTANTS’REPORT

–I-18–

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TheGroupreaseseswhetherornotitcontrolsaninvesteifactsandcircumstances

indicatethatherearechangestoneormoreofthethrelementsofcontrolistedabove.

ConsolidationofasubsidiarybeginswhentheGroupobtainscontroloverthesubsidiaryand

ceaseswhentheGrouplosescontrolofthesubsidiary.Specificaly,incomeandexpensesofa

subsidiaryacquiredordisposedofduringtheperiodareincludedintheconsolidatedstatementsof

profitorlosandothercomprehensiveincomefromthedatetheGroupgainscontroluntilthedate

whentheGroupceasestocontrolthesubsidiary.

Profitorlosandeachitemofothercomprehensiveincomeareatributedtotheownersof

theCompanyandtothenon-controlinginterests.Totalcomprehensiveincomeofsubsidiariesis

atributedtotheownersoftheCompanyandtothenon-controlinginterestsevenifthisresultsin

thenon-controlinginterestshavingadeficitbalance.

Whenecesary,adjustmentsaremadetothefinancialstatementsofsubsidiariestobring

theiracountingpoliciesintolinewiththeGroup’sacountingpolicies.

Alintragroupasetsandliabilities,equity,income,expensesandcashflowsrelatingto

transactionsbetwenmembersoftheGroupareliminatedinfulonconsolidation.

Non-controlinginterestsinsubsidiariesarepresentedseparatelyfromtheGroup’sequity

therein,whichrepresentpresentownershipinterestsentitlingtheirholderstoaproportionateshare

ofnetasetsoftherelevantsubsidiariesuponliquidation.

(b)ChangesintheGroup’sownershipinterestsinexistingsubsidiaries

ChangesintheGroup’sownershipinterestsinsubsidiariesthatdonotresultintheGroup

losingcontroloverthesubsidiariesareacountedforasequitytransactions.Thecaryingamounts

oftheGroup’srelevantcomponentsofequityandthenon-controlinginterestsareadjustedto

reflecthechangesintheirelativeinterestsinthesubsidiaries,includingre-atributionofrelevant

reservesbetwentheGroupandthenon-controlinginterestsacordingtotheGroup’sandthe

non-controlinginterests’proportionateinterests.Anydiferencebetwentheamountbywhichthe

non-controlinginterestsareadjustedandthefairvalueoftheconsiderationpaidoreceivedis

recognisedirectlyinequityandatributedtownersoftheCompany.

WhentheGrouplosescontrolofasubsidiary,theasetsandliabilitiesofthatsubsidiaryand

non-controlinginterests(ifany)arederecognised.Againorlosisrecognisedinprofitorlos

andiscalculatedasthediferencebetwen(i)theagregateofthefairvalueoftheconsideration

receivedandthefairvalueofanyretainedinterestand(i)thepreviouscaryingamountofthe

asetsandliabilitiesofthesubsidiaryatributabletotheownersoftheCompany.Alamounts

APENDIXIACOUNTANTS’REPORT

–I-19–

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previouslyrecognisedinothercomprehensiveincomeinrelationtothatsubsidiaryareacounted

forasiftheGrouphadirectlydisposedoftherelatedasetsorliabilitiesofthesubsidiary(i.e.

reclasifiedtoprofitorlosortransferedtoanothercategoryofequityaspecified/permitedby

aplicableIFRSAcountingStandards).Thefairvalueofanyinvestmentretainedintheformer

subsidiaryathedatewhencontrolislostisregardedasthefairvalueoninitialrecognitionfor

subsequentacountingunderIFRS9“FinancialInstruments”or,whenaplicable,thecoston

initialrecognitionofaninvestmentinanasociateorajointventure.

(c)Businescombinations

Acquisitionsofbusineses,otherthanbusinescombinationundercomoncontrol,are

acountedforusingtheacquisitionmethod.Theconsiderationtransferedinabusines

combinationismeasuredatfairvalue,whichiscalculatedasthesumoftheacquisition-datefair

valuesoftheasetstransferedbytheGroup,liabilitiesincuredbytheGrouptotheformer

ownersoftheacquireandthequityinterestsisuedbytheGroupinexchangeforcontrolofthe

acquire.Acquisition-relatedcostsaregeneralyrecognisedinprofitorlosasincured.

Atheacquisitiondate,theidentifiableasetsacquiredandtheliabilitiesasumedare

recognisedatheirfairvalue,excepthat:

(cid:129)deferedtaxasetsorliabilities,andasetsorliabilitiesrelatedtoemployebenefit

arangementsarerecognisedandmeasuredinacordancewithIAS12“IncomeTaxes”

andIAS19“EmployeBenefits”,respectively;

(cid:129)liabilitiesorequityinstrumentsrelatedtoshare-basedpaymentarangementsofthe

acquireorshare-basedpaymentarangementsoftheGroupenteredintotoreplace

share-basedpaymentarangementsoftheacquirearemeasuredinacordancewith

IFRS2“Share-basedPayment”atheacquisitiondate(setheacountingpolicy

below);and

(cid:129)asets(ordisposalgroups)thatareclasifiedasheldforsaleinacordancewithIFRS5

“Non-curentAsetsHeldforSaleandDiscontinuedOperations”aremeasuredin

acordancewiththatstandard.

Godwilismeasuredasthexcesofthesumoftheconsiderationtransfered,theamountof

anynon-controlinginterestsintheacquire,andthefairvalueoftheacquirer’spreviouslyheld

equityinterestintheacquire(ifany)overthenetamountoftheidentifiableasetsacquiredand

theliabilitiesasumedasatacquisitiondate.If,aftere-asesment,thenetoftheacquisitiondate

amountoftheidentifiableasetsacquiredandliabilitiesasumedexcedsthesumofthe

APENDIXIACOUNTANTS’REPORT

–I-20–

---

considerationtransfered,theamountofanynon-controlinginterestsintheacquireandthefair

valueoftheacquirer’spreviouslyheldinterestintheacquire(ifany),thexcesisrecognised

imediatelyinprofitorlosasabargainpurchasegain.

Non-controlingintereststhatarepresentownershipinterestsandentitletheirholderstoa

proportionateshareoftherelevantsubsidiary’snetasetsintheventofliquidationareinitialy

measuredathenon-controlinginterests’proportionateshareoftherecognisedamountsofthe

acquire’sidentifiablenetasetsoratfairvalue.

WhentheconsiderationtransferedbytheGroupinabusinescombinationincludesa

contingentconsiderationarangement,thecontingentconsiderationismeasuredatitsacquisition

datefairvalueandincludedaspartoftheconsiderationtransferedinabusinescombination.

Changesinthefairvalueofthecontingentconsiderationthatqualifyasmeasurementperiod

adjustmentsareadjustedretrospectively.Measurementperiodadjustmentsareadjustmentsthat

arisefromaditionalinformationobtaineduringthe“measurementperiod”(whichcanotexced

oneyearfromtheacquisitiondate)aboutfactsandcircumstancesthatexistedatheacquisition

date.

Thesubsequentacountingforthecontingentconsiderationthatdonotqualifyas

measurementperiodadjustmentsdependsonhowthecontingentconsiderationisclasified.

Contingentconsiderationthatisclasifiedasequityisnotremeasuredatsubsequentreporting

datesanditsubsequentsetlementisacountedforwithinequity.Contingentconsiderationthatis

clasifiedasanasetoraliabilityisremeasuredtofairvalueatsubsequentreportingdates,with

thecorespondingainorlosbeingrecognisedinprofitorlos.

Whenabusinescombinationisachievedinstages,theGroup’spreviouslyheldequity

interestintheacquireisremeasuredtoitsacquisitiondatefairvalue(i.e.thedatewhenthe

Groupobtainscontrol)andtheresultingainorlos,ifany,isrecognisedinprofitorlosorother

comprehensiveincome,asapropriate.Amountsarisingfrominterestsintheacquirepriortothe

acquisitiondatethathavepreviouslybenrecognisedinothercomprehensiveincomeand

measuredunderIFRS9wouldbeacountedforonthesamebasisaswouldberequiredifthe

Grouphadisposedirectlyofthepreviouslyheldequityinterest.

Iftheinitialacountingforabusinescombinationisincompletebythendofthereporting

periodinwhichthecombinationocurs,theGroupreportsprovisionalamountsfortheitemsfor

whichtheacountingisincomplete.Thoseprovisionalamountsareadjusteduringthe

measurementperiod(seabove),andaditionalasetsorliabilitiesarerecognisedtoreflectnew

informationobtainedaboutfactsandcircumstancesthatexistedatheacquisitiondatethat,if

known,wouldhaveafectedtheamountsrecognisedathatdate.

APENDIXIACOUNTANTS’REPORT

–I-21–

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(d)Acquisitionofasubsidiarynotconstitutingabusines

WhentheGroupacquiresagroupofasetsandliabilitiesthatdonotconstituteabusines,

theGroupidentifiesandrecognisestheindividualidentifiableasetsacquiredandliabilities

asumedbyalocatingthepurchasepricefirstofinancialasetsandfinancialiabilitiesathe

respectivefairvalues,theremainingbalanceofthepurchasepriceisthenalocatedtotheother

individualidentifiableasetsandliabilitiesonthebasisoftheirelativefairvaluesathedateof

purchase.Suchatransactiondoesnotgiverisetogodwilorbargainpurchasegain.

(e)Investmentsinsubsidiaries

Investmentsinsubsidiariesarestatedatcostlesanyidentifiedimpairmentlosonthe

statementsofinancialpositionoftheCompany.

(f)Investmentsinasociates

Asociates

AnasociateisanentityoverwhichtheGrouphasignificantinfluence.Significant

influenceisthepowertoparticipateinthefinancialandoperatingpolicydecisionsoftheinveste

butisnotocontrolortohavejointcontroloverthosepolicies.

TheresultsandasetsandliabilitiesofasociatesareincorporatedintheHistoricalFinancial

Informationusingthequitymethodofacounting.Thefinancialstatementsofasociatesusedfor

equityacountingpurposesarepreparedusinguniformacountingpoliciesasthoseoftheGroup

forliketransactionsandeventsinsimilarcircumstances.Underthequitymethod,aninterestin

anasociateisinitialyrecognisedintheconsolidatedstatementsofinancialpositionatcostand

adjustedthereaftertorecognisetheGroup’shareoftheprofitorlosandothercomprehensive

incomeoftheasociate.Changesinetasetsoftheasociatesotherthanprofitorlosandother

comprehensiveincomearenotacountedforunlesuchchangesresultedinchangesinownership

interestheldbytheGroup.WhentheGroup’shareoflosesofanasociatexcedstheGroup’s

interestinthatasociate(whichincludesanylong-termintereststhat,insubstance,formpartof

theGroup’snetinvestmentintheasociate),theGroupdiscontinuesrecognisingitshareof

furtherloses.AditionalosesarerecognisedonlytothextenthatheGrouphasincuredlegal

orconstructiveobligationsormadepaymentsonbehalfoftheasociate.

Aninvestmentinanasociateisacountedforusingthequitymethodfromthedateon

whichtheinvestebecomesanasociate.Onacquisitionoftheinvestmentinanasociate,any

excesofthecostoftheinvestmentovertheGroup’shareofthenetfairvalueoftheidentifiable

asetsandliabilitiesoftheinvesteisrecognisedasgodwil,whichisincludedwithinthe

APENDIXIACOUNTANTS’REPORT

–I-22–

---

caryingamountoftheinvestment.AnyexcesoftheGroup’shareofthenetfairvalueofthe

identifiableasetsandliabilitiesoverthecostoftheinvestment,aftereasesment,isrecognised

imediatelyinprofitorlosintheperiodinwhichtheinvestmentisacquired.

Whenthereisobjectivevidencethatheinvestmentinanasociateisimpaired,thentire

caryingamountoftheinvestmentistestedforimpairmentinacordancewithIAS36

“ImpairmentofAsets”asasingleasetbycomparingitsrecoverableamount(higherofvaluein

useandfairvaluelescostsofdisposal)withitscaryingamount.Anyimpairmentlosrecognised

formspartofthecaryingamountoftheinvestment.Anyreversalofthatimpairmentlosis

recognisedinacordancewithIAS36tothextenthatherecoverableamountoftheinvestment

subsequentlyincreases.

WhentheGroupceasestohavesignificantinfluenceoveranasociate,itisacountedforas

adisposalofthentireinterestintheinvestewitharesultingainorlosbeingrecognisedin

profitorlos.WhentheGroupretainsaninterestintheformerasociateandtheretainedinterest

isafinancialasetwithinthescopeofIFRS9,theGroupmeasurestheretainedinterestatfair

valueathatdateandthefairvalueisregardedasitsfairvalueoninitialrecognitionin

acordancewithIFRS9.Thediferencebetwenthecaryingamountoftheasociateathedate

thequitymethodwasdiscontinued,andthefairvalueofanyretainedinterestandanyproceds

fromdisposingtherelevantinterestintheasociateisincludedinthedeterminationofthegainor

losondisposaloftheasociate.Inadition,theGroupacountsforalamountspreviously

recognisedinothercomprehensiveincomeinrelationtothatasociateonthesamebasisaswould

berequiredifthatasociatehadirectlydisposedoftherelatedasetsorliabilities.Therefore,ifa

gainorlospreviouslyrecognisedinothercomprehensiveincomebythatasociatewouldbe

reclasifiedtoprofitorlosonthedisposaloftherelatedasetsorliabilities,theGroup

reclasifiesthegainorlosfromequitytoprofitorlos(asareclasificationadjustment)upon

disposal/partialdisposaloftherelevantasociate.

WhentheGroupreducesitsownershipinterestinanasociatebutheGroupcontinuestouse

thequitymethod,theGroupreclasifiestoprofitorlostheproportionofthegainorlosthat

hadpreviouslybenrecognisedinothercomprehensiveincomerelatingtothatreductionin

ownershipinterestifthatgainorloswouldbereclasifiedtoprofitorlosonthedisposalofthe

relatedasetsorliabilities.

WhenaGroupentitytransactswithanasociateoftheGroup,profitsandlosesresulting

fromthetransactionswiththeasociatearerecognisedintheGroup’sHistoricalFinancial

InformationonlytothextentofinterestsintheasociatethatarenotrelatedtotheGroup.

TheCompany’sinvestmentsinasociatesareacountedforinthefinancialstatementsusing

thequitymethod.

APENDIXIACOUNTANTS’REPORT

–I-23–

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(g)Revenuerecognition

Revenueisrecognisedtodepicthetransferofgodstocustomersinanamounthatreflects

theconsiderationtowhichtheGroupexpectstobentitledinexchangeforthosegods.

Specificaly,theGroupusesa5-stepaproachtorevenuerecognition:

(cid:129)Step1:Identifythecontract(s)withacustomer

(cid:129)Step2:Identifytheperformanceobligationsinthecontract

(cid:129)Step3:Determinethetransactionprice

(cid:129)Step4:Alocatethetransactionpricetotheperformanceobligationsinthecontract

(cid:129)Step5:Recogniserevenuewhen(oras)thentitysatisfiesaperformanceobligation

Revenueisrecognisedwhen,oras,obligationsunderthetermsofacontractaresatisfied,

whichocurswhencontrolofthepromisedproductsorservicesistransferedtocustomers.

RevenueismeasuredastheamountofconsiderationtheGroupexpectstoreceiveinexchangefor

transferingproductsorservicestoacustomer(“transactionprice”).

Whentheconsiderationinacontractincludesavariableamount,theamountofconsideration

isestimatedtowhichtheGroupwilbentitledinexchangefortransferingthegodsorservices

tothecustomer.Thevariableconsiderationisestimatedatcontractinceptionandconstraineduntil

itishighlyprobablethatasignificantrevenuereversalintheamountofcumulativerevenue

recognisedwilnotocurwhentheasociateduncertaintywiththevariableconsiderationis

subsequentlyresolved.

Whenthecontractcontainsafinancingcomponentwhichprovidesthecustomerwitha

significantbenefitofinancingthetransferofgodsorservicestothecustomerformorethanone

year,revenueismeasuredathepresentvalueoftheamountreceivable,discountedusingthe

discountratethatwouldbereflectedinaseparatefinancingtransactionbetwentheGroupandthe

customeratcontractinception.Whenthecontractcontainsafinancingcomponentwhichprovides

theGroupwithasignificantfinancialbenefitformorethanoneyear,revenuerecognisedunderthe

contractincludestheinterestexpenseacretedonthecontractliabilityunderthefectiveinterest

method.Foracontractwheretheperiodbetwenthepaymentbythecustomerandthetransferof

thepromisedgodsorservicesisoneyearorles,thetransactionpriceisnotadjustedforthe

efectsofasignificantfinancingcomponent,usingthepracticalexpedientinIFRS15.

APENDIXIACOUNTANTS’REPORT

–I-24–

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Whenvolumerebatesareprovidedtocertaincustomersoncethequantityofproducts

purchaseduringtheperiodexcedsathresholdspecifiedinthecontract,rebatesareofsetagainst

amountspayablebythecustomer.Toestimatethevariableconsiderationforthexpectedfuture

rebates,themostlikelyamountmethodisused.

Revenueisrecognisedeitheratapointintimeorovertime,whentheGroupsatisfies

performanceobligationsbytransferingthepromisedgodsorservicestoitscustomers.

AcontractasetrepresentstheGroup’srightoconsiderationinexchangeforgodsor

servicesthatheGrouphastransferedtoacustomerthatisnotyetunconditional.Incontrast,a

receivablerepresentstheGroup’sunconditionalrightoconsideration,i.e.onlythepasageoftime

isrequiredbeforepaymentofthatconsiderationisdue.

AcontractliabilityrepresentstheGroup’sobligationtotransfergodsorservicestoa

customerforwhichGrouphasreceivedconsideration(oranamountofconsiderationisdue)from

thecustomer.

FurtherdetailsoftheGroup’srevenueandotherincomerecognitionpoliciesareasfolows:

Revenuefromsaleofgods

Revenuefromcontractswithcustomersisrecognisedathepointintimewhencontrolof

godsistransferedtothecustomers,generalywhentheGrouphasdeliveredgodstothe

locationspecifiedinthesalescontractandthebuyerhasconfirmedtheaceptanceofthegods.

ThecreditperiodgrantedtocustomersbytheGroupisdeterminedbasedontheircreditrisk

characteristics.TheGroupdoesnotexpectoanycontractswheretheperiodbetwenthetransfer

ofthepromisedgodstothecustomerandpaymentbythecustomerexcedoneyear.Asa

consequence,thereisnosignificantfinancingcomponent.

Rentalincome

Rentalincomeisrecognisedonatimeproportionbasisovertheleaseterms.

Provisionofpropertymanagementservices

Revenuefromtheprovisionofpropertymanagementservicesisrecognisedoverthe

scheduledperiodonastraight-linebasisbecausethecustomersimultaneouslyreceivesand

consumesthebenefitsprovidedbytheGroup.

APENDIXIACOUNTANTS’REPORT

–I-25–

---

Interestincome

Interestincomeisrecognisedonanacrualbasisusingthefectiveinterestmethodby

aplyingtheratethatexactlydiscountsthestimatedfuturecashreceiptsoverthexpectedlifeof

thefinancialinstrumentorashorterperiod,whenapropriate,tothenetcaryingamountofthe

financialaset.

(h)Leasing

Definitionofalease

Acontractis,orcontains,aleaseifthecontractconveystherightocontroltheuseofan

identifiedasetforaperiodoftimeinexchangeforconsideration.

Forcontractsenteredintormodifiedonorafterthedateofinitialaplicationorarising

frombusinescombinations,theGroupaseseswhetheracontractisorcontainsaleasebasedon

thedefinitionunderIFRS16atinceptionormodificationdate.Suchcontractwilnotbe

reasesedunlesthetermsandconditionsofthecontractaresubsequentlychanged.

TheGroupaslese

Aleases(irespectiveoftheyareoperatingleasesorfinanceleases)arerequiredtobe

capitalisedintheconsolidatedstatementsofinancialpositionasright-of-useasetsandlease

liabilities,butacountingpolicychoicesexistforanentitytochosenotocapitalise(i)leases

whichareshort-termleasesand/or(i)leasesforwhichtheunderlyingasetisoflow-value.The

Grouphaselectednotorecogniseright-of-useasetsandleaseliabilitiesforleasesforwhichat

thecomencementdatehavealeasetermlesthan12monthsandleasesoflow-valueasets.The

leasepaymentsasociatedwiththoseleaseshavebenexpensedonstraight-linebasisoverthe

leaseterm.

Paymentsasociatedwithshort-termleasesandleasesoflow-valueasetsarerecognisedona

straight-linebasisasanexpenseinprofitorlos.Short-termleasesareleaseswithaleasetermof

12monthsorles.

TheGroupalsoapliespracticalexpedientnotoseparatenon-leasecomponentsfromlease

component,andinsteadacountfortheleasecomponentandanyasociatednon-leasecomponents

asasingleleasecomponent.

TheGroupresentsright-of-useasetsandleaseliabilitieseparatelyintheconsolidated

statementsofinancialposition.

APENDIXIACOUNTANTS’REPORT

–I-26–

---

Right-of-useaset

Theright-of-useasetisrecognisedatcostandwouldcomprise:(i)theamountoftheinitial

measurementoftheleaseliability(sebelowfortheacountingpolicytoacountforlease

liability);(i)anyleasepaymentsmadeatorbeforethecomencementdate,lesanylease

incentivesreceived;(i)anyinitialdirectcostsincuredbythelese;and(iv)anestimateof

coststobeincuredbytheleseindismantlingandremovingtheunderlyingasetothe

conditionrequiredbythetermsandconditionsofthelease,unlesthosecostsareincuredto

produceinventories.TheGroupmeasurestheright-of-useasetsaplyingacostmodel.Underthe

costmodel,theGroupmeasurestheright-to-useasetatcost,lesanyacumulatedepreciation

andanyimpairmentloses,andadjustedforanyremeasurementofleaseliability.

Theright-of-useasetisubsequentlydepreciatedusingthestraight-linemethodfromthe

dateofinitialaplicationovertheshorteroftheremainingleasetermortheusefulifeofthe

underlyingaset.Theusefulives,residualvalueandepreciationmethodarereviewed,and

adjustedifapropriate,athendofeachreportingperiod.

Inadition,theright-of-useasetisreducedbyimpairmentloses,ifany,andadjustedfor

certainremeasurementsoftheleaseliability.

Leaseliability

Theleaseliabilityisrecognisedathepresentvalueoftheleasepaymentsthatarenotpaidat

thedateofcomencementofthelease.Theleasepaymentsarediscountedusingtheinterestrate

implicitinthelease,ifthatratecanbereadilydetermined.Ifthatratecanotbereadily

determined,theGroupusestheGroup’sincrementalborowingrate.

Thefolowingpaymentsfortheright-to-usetheunderlyingasetduringtheleasetermthat

arenotpaidathecomencementdateoftheleaseareconsideredtobeleasepayments:(i)fixed

paymentslesanyleaseincentivesreceivable;(i)variableleasepaymentsthatdependonanindex

orarate,initialymeasuredusingtheindexorateasatcomencementdate;(i)amounts

expectedtobepayablebytheleseunderesidualvalueguarantes;(iv)thexercisepriceofa

purchaseoptioniftheleseisreasonablycertaintoexercisethatoption;and(v)paymentsof

penaltiesforterminatingthelease,iftheleasetermreflectsthelesexercisinganoptionto

terminatethelease.

Subsequentothecomencementdate,theGroupmeasurestheleaseliabilityby:(i)

increasingthecaryingamountoreflectinterestontheleaseliability;(i)reducingthecarying

amountoreflectheleasepaymentsmade;and(i)remeasuringthecaryingamountoreflect

APENDIXIACOUNTANTS’REPORT

–I-27–

---

anyreasesmentorleasemodifications,e.g.,achangeinfutureleasepaymentsarisingfrom

changeinanindexorate,achangeintheleaseterm,achangeintheinsubstancefixedlease

paymentsorachangeinasesmentopurchasetheunderlyingaset.

TheGroupaslesor

Rentalincomefromoperatingleasesisrecognisedonastraight-linebasisoverthetermof

therelevantlease.Initialdirectcostsincuredinegotiatingandaranginganoperatingleaseare

adedtothecaryingamountoftheleasedasetandrecognisedonastraight-linebasisoverthe

leaseterm.

Leasemodifications

TheGroupacountsforaleasemodificationasaseparateleaseif:

(cid:129)themodificationincreasesthescopeoftheleasebyadingtherightouseoneormore

underlyingasets;and

(cid:129)theconsiderationfortheleasesincreasesbyanamountcomensuratewiththe

stand-alonepricefortheincreaseinscopeandanyapropriateadjustmentstothat

stand-alonepricetoreflecthecircumstancesoftheparticularcontract.

Foraleasemodificationthatisnotacountedforasaseparatelease,theGroupremeasures

theleaseliabilitybasedontheleasetermofthemodifiedleasebydiscountingtherevisedlease

paymentsusingarevisediscountrateathefectivedateofthemodification.TheGroup

acountsfortheremeasurementofleaseliabilitiesbymakingcorespondingadjustmentstothe

relevantright-of-useaset.Whenthemodifiedcontractcontainsaleasecomponentandoneor

moreaditionaleaseornon-leasecomponents,theGroupalocatestheconsiderationinthe

modifiedcontractoeachleasecomponentonthebasisoftherelativestand-alonepriceofthe

leasecomponentandtheagregatestand-alonepriceofthenon-leasecomponents.

(i)Foreigncurencies

Inpreparingthefinancialstatementsofeachindividualgroupentity,transactionsin

curenciesotherthanthefunctionalcurencyofthatentity(foreigncurencies)arerecordedinthe

respectivefunctionalcurency(i.e.thecurencyoftheprimaryeconomicenvironmentinwhichthe

entityoperates)atheratesofexchangeprevailingonthedatesofthetransactions.Athendof

thereportingperiod,monetaryitemsdenominatedinforeigncurenciesareretranslatedatherates

prevailingathatdate.Non-monetaryitemsthataremeasuredintermsofhistoricalcostina

foreigncurencyarenotretranslated.

APENDIXIACOUNTANTS’REPORT

–I-28–

---

TheHistoricalFinancialInformationispresentedinRMB,whichistheCompany’sfunctional

curency.EachentityintheGroupdeterminesitsownfunctionalcurencyanditemsincludedin

theHistoricalFinancialInformationofeachentityaremeasuredusingthatfunctionalcurency.

Exchangediferencesarisingonthesetlementofmonetaryitems,andontheretranslationof

monetaryitems,arerecognisedinprofitorlosintheperiodinwhichtheyarise.

ForthepurposesofpresentingtheHistoricalFinancialInformation,theasetsandliabilities

oftheGroup’sforeignoperationsaretranslatedintothepresentationcurencyoftheGroup(i.e.

RMB)usingexchangeratesprevailingathendofeachreportingperiod.Incomeandexpenses

itemsaretranslatedatheaveragexchangeratesfortheperiod,unlesexchangeratesfluctuate

significantlyduringtheperiod,inwhichcase,thexchangeratesprevailingathedatesof

transactionsareused.Exchangediferencesarising,ifany,arerecognisedinothercomprehensive

incomeandacumulatedinequityundertheheadingofexchangereserve(atributedtonon-

controlinginterestsasapropriate).

Onthedisposalofaforeignoperation(thatis,adisposaloftheGroup’sentireinterestina

foreignoperation,oradisposalinvolvinglosofcontroloverasubsidiarythatincludesaforeign

operation,orapartialdisposalofaninterestinanasociatethatincludesaforeignoperationof

whichtheretainedinterestbecomesafinancialaset),alofthexchangediferencesacumulated

inequityinrespectofthatoperationatributabletotheownersoftheCompanyarereclasifiedto

profitorlos.

Inadition,inrelationtoapartialdisposalofasubsidiarythatdoesnotresultintheGroup

losingcontroloverthesubsidiary,theproportionateshareofacumulatedexchangediferencesare

re-atributedtonon-controlinginterestsandarenotrecognisedinprofitorlos.Foralother

partialdisposals(i.e.partialdisposalsofasociatesthatdonotresultintheGrouplosing

significantinfluence),theproportionateshareoftheacumulatedexchangediferencesis

reclasifiedtoprofitorlos.

Godwilandfairvalueadjustmentsonidentifiableasetsacquiredarisingonanacquisition

ofaforeignoperationaretreatedasasetsandliabilitiesofthatforeignoperationandtranslatedat

therateofexchangeprevailingathendofeachreportingperiod.Exchangediferencesarising

arerecognisedinothercomprehensiveincome.

APENDIXIACOUNTANTS’REPORT

–I-29–

---

(j)Borowingcosts

Borowingcostsatributabledirectlytotheacquisition,constructionorproductionof

qualifyingasetswhichrequireasubstantialperiodoftimetobereadyfortheirintendeduseor

sale,arecapitalisedaspartofthecostofthoseasets.Incomearnedontemporaryinvestmentsof

specificborowingspendingtheirexpenditureonthoseasetsisdeductedfromborowingcosts

capitalised.Alotherborowingcostsarerecognisedinprofitorlosintheperiodinwhichthey

areincured.

(k)Governmentgrants

GovernmentgrantsarenotrecogniseduntilthereisreasonableasurancethatheGroupwil

complywiththeconditionsatachingtothemandthathegrantswilbereceived.

Governmentgrantsarerecognisedinprofitorlosonasystematicbasisovertheperiodsin

whichtheGrouprecognisesasexpensetherelatedcostsforwhichthegrantsareintendedto

compensate.Specificaly,governmentgrantswhoseprimaryconditionisthatheGroupshould

purchase,constructorotherwiseacquireproperty,plantandequipmentarerecognisedasdefered

revenueintheconsolidatedstatementsofinancialpositionandtransferedtoprofitorlosona

systematicandrationalbasisovertheusefulivesoftherelatedasets.

Governmentgrantsthatarereceivableascompensationforexpensesorlosesalready

incuredorforthepurposeofgivingimediatefinancialsuportotheGroupwithnofuture

relatedcostsarerecognisedinprofitorlosintheperiodinwhichtheybecomereceivable.

(l)Retirementbenefitcosts

Paymentstodefinedcontributionretirementplansarechargedasanexpensewhenemployes

haverenderedservice.

(m)Short-termemployebenefits

Short-termemployebenefitsarerecognisedatheundiscountedamountofthebenefits

expectedtobepaidasandwhenemployesrenderedtheservices.Alshort-termemploye

benefitsarerecognisedasanexpenseunlesanotherIFRSAcountingstandardsrequiresor

permitstheinclusionofthebenefitinthecostofanaset.

Aliabilityisrecognisedforbenefitsacruingtoemployes(suchaswagesandsalaries,

anualeaveandsickleave)afterdeductinganyamountalreadypaid.

APENDIXIACOUNTANTS’REPORT

–I-30–

---

(n)Share-basedpaymentransactions

Equity-setledshare-basedpaymentstoemployes(includingdirectorsoftheCompany)are

measuredathefairvalueofthequityinstrumentsathegrantdate.Thecostofequity-setled

transactionswithemployesforgrantsismeasuredbyreferencetothefairvalueathedateat

whichtheyaregranted.Furtherdetailsofwhicharegiveninote40totheHistoricalFinancial

Information.

Thecostofequity-setledtransactionsisrecognizedinexpense,togetherwitha

corespondingincreaseinequity,overtheperiodinwhichtheperformanceand/orservice

conditionsarefulfiled.Thecumulativexpenserecognizedforequity-setledtransactionsathe

endofeachreportingperioduntilthevestingdatereflectsthextentowhichthevestingperiod

hasexpiredandtheGroup’sbestestimateofthenumberofequityinstrumentsthatwilultimately

vest.Thechargeorcreditothestatementofprofitorlosforaperiodrepresentsthemovementin

thecumulativexpenserecognizedasathebeginingandendofthatperiod.

Serviceandnon-marketperformanceconditionsarenotakenintoacountwhendetermining

thegrantdatefairvalueofawards,buthelikelihodoftheconditionsbeingmetisasesedas

partoftheGroup’sbestestimateofthenumberofequityinstrumentsthatwilultimatelyvest.

Marketperformanceconditionsarereflectedwithinthegrantdatefairvalue.Anyotherconditions

atachedtoanaward,butwithoutanasociatedservicerequirement,areconsideredtobe

non-vestingconditions.Non-vestingconditionsarereflectedinthefairvalueofanawardandlead

toanimediatexpensingofanawardunlestherearealsoserviceand/orperformance

conditions.

Forawardsthatdonotultimatelyvestbecausenon-marketperformanceand/orservice

conditionshavenotbenmet,noexpenseisrecognized.Whereawardsincludeamarketor

non-vestingcondition,thetransactionsaretreatedasvestingirespectiveofwhetherthemarketor

non-vestingconditionisatisfied,providedthatalotherperformanceand/orserviceconditionsare

satisfied.

Wherethetermsofanequity-setledawardaremodified,asaminimumanexpenseis

recognizedasifthetermshadnotbenmodified,iftheoriginaltermsoftheawardaremet.In

adition,anexpenseisrecognizedforanymodificationthatincreasesthetotalfairvalueofthe

share-basedpayments,orisotherwisebeneficialtothemployeasmeasuredathedateof

modification.

APENDIXIACOUNTANTS’REPORT

–I-31–

---

Whereanequity-setledawardiscanceled,itistreatedasifithadvestedonthedateof

cancelation,andanyexpensenotyetrecognizedfortheawardisrecognizedimediately.This

includesanyawardwherenon-vestingconditionswithinthecontrolofeithertheGrouporthe

employearenotmet.However,ifanewawardisubstitutedforthecanceledaward,andis

designatedasareplacementawardonthedatethatitisgranted,thecanceledandnewawardsare

treatedasiftheywereamodificationoftheoriginalaward,asdescribedintheprevious

paragraph.

Thedilutivefectofoutstandingrestrictedsharesisreflectedasaditionalsharedilutionin

thecomputationofearningspershare.

(o)Taxation

Incometaxexpenserepresentsthesumofthecurentaxandeferedtax.

Curentax

Curentaxisbasedontheprofitorlosfromordinaryactivitiesadjustedforitemsthatare

non-asesableordisalowableforincometaxpurposesandiscalculatedusingtaxratesthathave

benenactedorsubstantivelyenactedathendofreportingperiod.

Deferedtax

Deferedtaxisrecognisedontemporarydiferencesbetwenthecaryingamountsofasets

andliabilitiesintheHistoricalFinancialInformationandthecorespondingtaxbasesusedinthe

computationoftaxableprofits.Deferedtaxliabilitiesaregeneralyrecognisedforaltaxable

temporarydiferences.Deferedtaxasetsaregeneralyrecognisedforaldeductibletemporary

diferencestothextenthatitisprobablethataxableprofitswilbeavailableagainstwhich

thosedeductibletemporarydiferencescanbeutilised.Suchdeferedtaxasetsandliabilitiesare

notrecognisedifthetemporarydiferencearisesfromtheinitialrecognition(otherthanina

businescombination)ofasetsandliabilitiesinatransactionthatafectsneitherthetaxable

profitsnortheacountingprofit.Inadition,deferedtaxliabilitiesarenotrecognisedifthe

temporarydiferencearisesfromtheinitialrecognitionofgodwil.

Deferedtaxliabilitiesarerecognisedfortaxabletemporarydiferencesarisingon

investmentsinsubsidiariesorasociatesexceptwheretheGroupisabletocontrolthereversalof

thetemporarydiferenceanditisprobablethathetemporarydiferencewilnotreverseinthe

foreseablefuture.

APENDIXIACOUNTANTS’REPORT

–I-32–

---

Deferedtaxasetsarisingfromdeductibletemporarydiferencesasociatedwithsuch

investmentsandinterestsareonlyrecognisedtothextenthatitisprobablethatherewilbe

suficientaxableprofitsagainstwhichtoutilisethebenefitsofthetemporarydiferencesandthey

arexpectedtoreverseintheforeseablefuture.

Thecaryingamountofdeferedtaxasetsisreviewedathendofeachreportingperiod

andreducedtothextenthatitisnolongerprobablethatsuficientaxableprofitswilbe

availabletoalowalorpartoftheasetoberecovered.

Deferedtaxasetsandliabilitiesaremeasuredathetaxratesthatarexpectedtoaplyin

theperiodinwhichtheliabilityisetledortheasetrealised,basedontaxrates(andtaxlaws)

thathavebenenactedorsubstantivelyenactedbythendofeachreportingperiod.

Themeasurementofdeferedtaxliabilitiesandasetsreflectsthetaxconsequencesthat

wouldfolowfromthemanerinwhichtheGroupexpects,athendofeachreportingperiod,to

recoverorsetlethecaryingamountofitsasetsandliabilities.

Curentandeferedtaxisrecognisedinprofitorlos,exceptwhentheyrelatetoitemsthat

arerecognisedinothercomprehensiveincomeordirectlyinequity,inwhichcase,thecurentand

deferedtaxarealsorecognisedinothercomprehensiveincomeordirectlyinequityrespectively.

Wherecurentaxordeferedtaxarisesfromtheinitialacountingforabusinescombination,the

taxefectisincludedintheacountingforthebusinescombination.

(p)Property,plantandequipment

Property,plantandequipmentarestatedintheconsolidatedstatementsofinancialposition

atcostlesubsequentacumulatedepreciationandacumulatedimpairmentloses,ifany.

Thecostofproperty,plantandequipmentincludesitspurchasepriceandthecostsdirectly

atributabletotheacquisitionoftheitems.

Subsequentcostsareincludedintheaset’scaryingamountorecognisedasaseparate

aset,asapropriate,onlywhenitisprobablethatfutureconomicbenefitsasociatedwiththe

itemwilflowtotheGroupandthecostoftheitemcanbemeasuredreliably.Thecarying

amountofthereplacedpartisderecognised.Alotherepairsandmaintenancearerecognisedas

anexpenseinprofitorlosduringtheperiodinwhichtheyareincured.

APENDIXIACOUNTANTS’REPORT

–I-33–

---

Property,plantandequipmentaredepreciatedsoastowriteoftheircostorvaluationetof

expectedresidualvalueovertheirestimatedusefulivesonastraight-linebasis.Theusefulives,

residualvalueandepreciationmethodarereviewed,andadjustedifapropriate,athendof

eachreportingperiod.Theusefulivesareasfolows:

PropertyandBuildings20−30years

Productionequipment3−10years

Electronicequipment3years

Transportationvehicle4years

Oficequipment5years

Leaseholdimprovement3−5years,ortermsofleasecontract

Anasetiswritendownimediatelytoitsrecoverableamountifitscaryingamountis

higherthantheaset’sestimatedrecoverableamount.

Anitemofproperty,plantandequipmentisderecognisedupondisposalorwhenofuture

economicbenefitsarexpectedtoarisefromthecontinueduseoftheaset.Anygainorlos

arisingonderecognitionoftheaset(calculatedasthediferencebetwenthenetdisposal

procedsandthecaryingamountoftheitem)isincludedinprofitorlosintheperiodinwhich

theitemisderecognised.

(q)Intangibleasets(otherthangodwil)

Intangibleasetsacquiredseparatelyareinitialyrecognisedatcost.Thecostofintangible

asetsacquiredinabusinescombinationisfairvalueathedateofacquisition.Subsequently,

intangibleasetswithfiniteusefulivesarecariedatcostlesacumulatedamortisationand

acumulatedimpairmentloses.

Amortisationisprovidedonastraight-linebasisovertheirusefulivesasfolows.Intangible

asetswithindefiniteusefulivesarecariedatcostlesanyacumulatedimpairmentloses.The

amortisationexpenseisrecognisedinprofitorlos.

Computersoftware3years

Trademarks10years

Anintangibleasetisderecognisedondisposal,orwhenofutureconomicbenefitsare

expectedfromuseordisposal.Gainsandlosesarisingfromderecognitionofanintangibleaset,

measuredasthediferencebetwenthenetdisposalprocedsandthecaryingamountoftheaset,

arerecognisedinprofitorloswhentheasetisderecognised.

APENDIXIACOUNTANTS’REPORT

–I-34–

---

(r)Researchandevelopmentcosts

Expenditureoninternalydevelopedproductsiscapitalisedifitcanbedemonstratedthat:

(cid:129)itistechnicalyfeasibletodeveloptheproductforitobesold;

(cid:129)adequateresourcesareavailabletocompletethedevelopment;

(cid:129)thereisanintentiontocompleteandseltheproduct;

(cid:129)theGroupisabletoseltheproduct;and

(cid:129)saleoftheproductwilgeneratefutureconomicbenefits;andexpenditureonthe

projectcanbemeasuredreliably.

Developmentexpenditurenotsatisfyingtheabovecriteriandexpenditureontheresearch

phaseofinternalprojectsarerecognisedinprofitorlosasincured.

(s)Impairmentlosesontangibleandintangibleasetsotherthangodwil

Athendofeachreportingperiod,theGroupreviewsthecaryingamountsofitstangible

andintangibleasetswithfiniteusefulivestodeterminewhetherthereisanyindicationthathose

asetshavesuferedanimpairmentlos.Ifanysuchindicationexists,therecoverableamountof

theasetisestimatedinordertodeterminethextentoftheimpairmentlos,ifany.

Whenitisnotposibletoestimatetherecoverableamountofanindividualaset,theGroup

estimatestherecoverableamountofthecash-generatingunitowhichtheasetbelongs.Wherea

reasonableandconsistentbasisofalocationcanbeidentified,corporateasetsarealsoalocated

toindividualcash-generatingunits,orotherwisetheyarealocatedtothesmalestgroupof

cash-generatingunitsforwhichareasonableandconsistentalocationbasiscanbeidentified.

Recoverableamountisthehigherofvalueinuseandfairvaluelescostsofdisposal.In

asesingvalueinuse,thestimatedfuturecashflowsoftheaset(orthecash-generatingunit)are

discountedtotheirpresentvalueusingapre-taxdiscountratethatreflectscurentmarket

asesmentsofthetimevalueofmoneyandtheriskspecifictotheaset(orthecash-generating

unit)forwhichthestimatesofuturecashflowshavenotbenadjusted.

Iftherecoverableamountofanaset(orthecash-generatingunit)isestimatedtobelesthan

itscaryingamount,thecaryingamountoftheaset(orthecash-generatingunit)isreducedtoits

recoverableamount.Animpairmentlosisrecognisedimediatelyinprofitorlos.

APENDIXIACOUNTANTS’REPORT

–I-35–

---

Whenanimpairmentlosubsequentlyreverses,thecaryingamountoftheaset(orthe

cash-generatingunit)isincreasedtotherevisedestimateofitsrecoverableamount,butsothathe

increasedcaryingamountdoesnotexcedthecaryingamounthatwouldhavebendetermined

hadnoimpairmentlosbenrecognisedfortheaset(orthecash-generatingunit)inpriorperiods.

Areversalofanimpairmentlosisrecognisedimediatelyinprofitorlos.

(t)Financialinstruments

Financialasetsandfinancialiabilitiesarerecognisedwhenagroupentitybecomesaparty

tothecontractualprovisionsoftheinstrument.

(i)Financialasets

Afinancialaset(unlesitisatradereceivablewithoutasignificantfinancingcomponent)is

initialymeasuredatfairvalueplus,foranitemnotatfairvaluethroughprofitorlos

(“FVTPL”),transactioncoststhataredirectlyatributabletoitsacquisitionorisue.Atrade

receivablewithoutasignificantfinancingcomponentisinitialymeasuredathetransactionprice.

Purchasesorsalesofinancialasetsthatrequiredeliveryofasetswithinatimeframe

establishedbyregulationorconventioninthemarketplace(regularwaytrades)arerecognisedon

thetradedate,i.e.,thedatethatheGroupcomitstopurchaseorseltheaset.

Financialasetswithembedederivativesareconsideredintheirentiretywhendetermining

whethertheircashflowsaresolelypaymentofprincipalandinterest.

Efectiveinterestmethod

Thefectiveinterestmethodisamethodofcalculatingtheamortisedcostofafinancial

asetorfinancialiabilityandofalocatinginterestincomeorinterestexpenseovertheRelevant

Periods.Thefectiveinterestrateistheratethatexactlydiscountsestimatedfuturecashreceipts

orpaymentsthroughthexpectedlifeofthefinancialasetorliability,orwhereapropriate,a

shorterperiod.

Debtinstruments

SubsequentmeasurementofdebtinstrumentsdependsontheGroup’sbusinesmodelfor

managingtheasetandthecashflowcharacteristicsoftheaset.Therearetwomeasurement

categoriesintowhichtheGroupclasifiesitsdebtinstruments:

APENDIXIACOUNTANTS’REPORT

–I-36–

---

Amortisedcost:Asetsthatareheldforcolectionofcontractualcashflowswherethosecash

flowsrepresentsolelypaymentsofprincipalandinterestaremeasuredatamortisedcost.Financial

asetsatamortisedcostaresubsequentlymeasuredusingthefectiveinterestratemethod.

Interestincome,foreignexchangegainsandlosesandimpairmentarerecognisedinprofitorlos.

Anygainonderecognitionisrecognisedinprofitorlos.

FVTPL:FinancialasetsatFVTPLincludefinancialasetsheldfortrading,financialasets

designateduponinitialrecognitionatFVTPLorfinancialasetsmandatorilyrequiredtobe

measuredatfairvalue.Financialasetsareclasifiedasheldfortradingiftheyareacquiredfor

thepurposeofselingorepurchasinginthenearterm.Derivatives,includingseparatedembeded

derivatives,arealsoclasifiedasheldfortradingunlestheyaredesignatedasefectivehedging

instruments.Financialasetswithcashflowsthatarenotsolelypaymentsofprincipalandinterest

areclasifiedandmeasuredatFVTPL,irespectiveofthebusinesmodel,wherebychangesinfair

value,interestincomecalculatedusingthefectiveinterestratemethodandforeignexchange

gainsandlosesarerecognisedinprofitorlos.Notwithstandingthecriteriafordebtinstruments

tobeclasifiedatamortisedcostoratFVTOCI,asdescribedabove,debtinstrumentsmaybe

designatedatFVTPLoninitialrecognitionifdoingsoeliminates,orsignificantlyreduces,an

acountingmismatch.

Equityinstruments

Oninitialrecognitionofanequityinvestmenthatisnotheldfortrading,theGroupcould

irevocablyelectopresentsubsequentchangesintheinvestment’sfairvalueinother

comprehensiveincome.Thiselectionismadeonaninvestment-by-investmentbasis.Dividend

incomearerecognisedinprofitorlosunlesthedividendincomeclearlyrepresentsarecoveryof

partofthecostoftheinvestments.Othernetgainsandlosesarerecognisedinother

comprehensiveincomeandarenotreclasifiedtoprofitorlos.Alotherequityinstrumentsare

clasifiedasFVTPL,wherebychangesinfairvalue,dividendsandinterestincomearerecognised

inprofitorlos.

Impairmentlosonfinancialasets

TheGrouprecognisesalosalowanceforexpectedcreditlos(“ECL”)(asdefinedonote

37)onfinancialasetswhicharesubjectoimpairmentunderIFRS9“FinancialInstruments”.The

amountofECLisupdatedathendofeachreportingperiodtoreflectchangesincreditrisksince

initialrecognition.

LifetimeECLrepresentstheECLthatwilresultfromalposibledefaulteventsoverthe

expectedlifeoftherelevantinstrument.Incontrast,12-monthECL(“12mECL”)representsthe

portionoflifetimeECLthatisexpectedtoresultfromdefaulteventsthatareposiblewithin12

APENDIXIACOUNTANTS’REPORT

–I-37–

---

monthsafterthereportingdate.AsesmentaredonebasedontheGroup’shistoricalcreditlos

experience,adjustedforfactorsthatarespecifictothedebtors,generaleconomiconditionsand

anasesmentofboththecurentconditionsathereportingdateaswelastheforecastofuture

conditions.

TheGrouphaselectedtomeasurelosalowancesfortradereceivablesusingIFRS9

simplifiedaproachandalwaysrecogniseslifetimeECLfortradereceivables.TheECLonthese

financialasetsareasesedcolectivelyusingaprovisionmatrixbasedontheGroup’shistorical

creditlosexperience,adjustedforfactorsthatarespecifictothedebtors,generaleconomic

conditionsandanasesmentofboththecurentaswelastheforecastdirectionofconditionsat

thereportingdate,includingtimevalueofmoneywhereapropriate.

Forotherfinancialinstruments,theGroupmeasuresthelosalowancequalto12mECL,

unlestherehasbenasignificantincreaseinthecreditrisksinceinitialrecognitionorevidence

thatafinancialasetiscredit-impaired,thentheGrouprecogniseslifetimeECL.Theasesment

ofwhetherlifetimeECLshouldberecognisedisbasedonsignificantincreasesinthelikelihodor

riskofadefaultocuringsinceinitialrecognition.

Significantincreaseincreditrisk

Inasesingwhetherthecreditriskonafinancialinstrumenthasincreasedsignificantlysince

initialrecognition,theGroupcomparestheriskofadefaultocuringonthefinancialinstrument

asathereportingdatewiththeriskofadefaultocuringonthefinancialinstrumentasathe

dateofinitialrecognition.Inmakingthisasesment,theGroupconsidersbothquantitativeand

qualitativeinformationthatisreasonableandsuportable,includinghistoricalexperienceand

forward-lokinginformationthatisavailablewithoutunduecostorefort.Forward-loking

informationconsideredincludesthefutureprospectsoftheindustriesinwhichtheGroup’sdebtors

operateobtainedfromeconomicexpertreports,financialanalystsandgovernmentalbodies,aswel

asconsiderationofvariousexternalsourcesofactualandforecasteconomicinformationthatrelate

totheGroup’scoreoperations.

Inparticular,thefolowinginformationistakenintoacountwhenasesingwhethercredit

riskhasincreasedsignificantly:

(cid:129)anactualorexpectedsignificantdeteriorationinthefinancialinstrument’sexternal(if

available)orinternalcreditrating;

(cid:129)significantdeteriorationinexternalmarketindicatorsofcreditriskforaparticular

financialinstrument,e.g.asignificantincreaseinthecreditspread,orthecreditdefault

swapricesforthedebtor;

APENDIXIACOUNTANTS’REPORT

–I-38–

---

(cid:129)existingorforecastadversechangesinbusines,financialoreconomiconditionsthat

arexpectedtocauseasignificantdecreaseinthedebtor’sabilitytometitsdebt

obligations;

(cid:129)anactualorexpectedsignificantdeteriorationintheoperatingresultsofthedebtor;

(cid:129)anactualorexpectedsignificantadversechangeintheregulatory,economic,or

technologicalenvironmentofthedebtorthatresultsinasignificantdecreaseinthe

debtor’sabilitytometitsdebtobligations.

Irespectiveoftheoutcomeoftheaboveasesment,theGroupresumesthathecreditrisk

hasincreasedsignificantlysinceinitialrecognitionwhencontractualpaymentsaremorethan30

dayspastdue,unlestheGrouphasreasonableandsuportableinformationthatdemonstrates

otherwise.

Despitetheaforegoing,theGroupasumesthathecreditriskonadebtinstrumenthasnot

increasedsignificantlysinceinitialrecognitionifthedebtinstrumentisdeterminedtohavelow

creditriskathereportingdate.Adebtinstrumentisdeterminedtohavelowcreditriskifi)ithas

alowriskofdefault,i)theborowerhasastrongcapacitytometitscontractualcashflow

obligationsintheneartermandi)adversechangesineconomicandbusinesconditionsinthe

longertermay,butwilnotnecesarily,reducetheabilityoftheborowertofulfilitscontractual

cashflowobligations.TheGroupconsidersadebtinstrumentohavelowcreditriskwhenithas

aninternalorexternalcreditratingof“investmentgrade”asperglobalyunderstodefinition.

TheGroupregularlymonitorsthefectivenesofthecriteriausedtoidentifywhetherthere

hasbenasignificantincreaseincreditriskandrevisesthemasapropriatetoensurethathe

criteriarecapableofidentifyingsignificantincreaseincreditriskbeforetheamountbecomes

pastdue.

Definitionofdefault

Forinternalcreditriskmanagement,theGroupconsidersaneventofdefaultohaveocured

wheninformationdevelopedinternalyorobtainedfromexternalsourcesindicatesthathedebtor

isunlikelytopayitscreditors,includingtheGroup,inful(withoutakingintoacountany

colateralsheldbytheGroup).

Irespectiveoftheaboveanalysis,theGroupconsidersthatdefaulthasocuredwhena

financialasetismorethan90dayspastdueunlestheGrouphasreasonableandsuportable

informationtodemonstratethatamorelagingdefaultcriterionismoreapropriate.

APENDIXIACOUNTANTS’REPORT

–I-39–

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Credit-impairedfinancialasets

Afinancialasetiscredit-impairedwhenoneormoreventsofdefaulthathavea

detrimentalimpactonthestimatedfuturecashflowsofthatfinancialasethaveocured.

Evidencethatafinancialasetiscredit-impairedincludesobservabledatabouthefolowing

events:

(a)significantfinancialdificultyoftheisuerortheborower;

(b)abreachofcontract,suchasadefaultorpastduevent;

(c)thelender(s)oftheborower,foreconomicorcontractualreasonsrelatingtothe

borower’sfinancialdificulty,havingrantedtotheboroweraconcesion(s)thathe

lender(s)wouldnototherwiseconsider;or

(d)itisbecomingprobablethatheborowerwilenterbankruptcyorotherfinancial

reorganisation.

Write-ofpolicy

TheGroupwritesofafinancialasetwhenthereisinformationindicatingthathe

counterpartyisinseverefinancialdificultyandthereisnorealisticprospectofrecovery,e.g.

whenthecounterpartyhasbenplacedunderliquidationorhasenteredintobankruptcy

procedings.Financialasetswritenofmaystilbesubjectoenforcementactivitiesunderthe

Group’srecoveryprocedures,takingintoacountlegaladvicewhereapropriate.Awrite-of

constitutesaderecognitionevent.Anysubsequentrecoveriesmadearerecognisedinprofitorlos.

MeasurementandrecognitionofECL

ThemeasurementofECLisafunctionoftheprobabilityofdefault,losgivendefault(i.e.

themagnitudeofthelosifthereisadefault)andthexposureatdefault.Theasesmentofthe

probabilityofdefaultandlosgivendefaultisbasedonhistoricaldatadjustedby

forward-lokinginformation.EstimationofECLreflectsanunbiasedandprobability-weighted

amounthatisdeterminedwiththerespectiverisksofdefaultocuringastherelevantweighting.

Generaly,theECListhediferencebetwenalcontractualcashflowsthatareduetothe

GroupinacordancewiththecontractandalthecashflowsthatheGroupexpectstoreceive,

discountedathefectiveinterestratedeterminedatinitialrecognition.

APENDIXIACOUNTANTS’REPORT

–I-40–

---

WhereECLismeasuredonacolectivebasistocaterforcaseswherevidenceathe

individualinstrumentlevelmaynotyetbeavailable,thefinancialinstrumentsaregroupedonthe

folowingbasis:

(cid:129)Natureofinancialinstruments(i.e.theGroup’stradereceivables,othereceivablesare

eachasesedasaseparategroup.NotereceivablesareasesedforECLonan

individualbasis);

(cid:129)Past-duestatus;

(cid:129)Nature,sizeandindustryofdebtors;and

(cid:129)Externalcreditratingswhereavailable.

Thegroupingisregularlyreviewedbymanagementoensuretheconstituentsofeachgroup

continuetosharesimilarcreditriskcharacteristics.

Interestincomeiscalculatedbasedonthegroscaryingamountofthefinancialasetunles

thefinancialasetiscreditimpaired,inwhichcaseinterestincomeiscalculatedbasedon

amortisedcostofthefinancialaset.

TheGrouprecognisesanimpairmentgainorlosinprofitorlosforalfinancialinstruments

byadjustingtheircaryingamounthroughalosalowanceacount.

Derecognitionofinancialasets

TheGroupderecognisesafinancialasetonlywhenthecontractualrightstothecashflows

fromtheasetexpire,orwhenitransfersthefinancialasetandsubstantialyaltherisksand

rewardsofownershipoftheasetoanotherparty.

Onderecognitionofafinancialasetmeasuredatamortisedcost,thediferencebetwenthe

aset’scaryingamountandthesumoftheconsiderationreceivedandreceivableisrecognisedin

profitorlos.

APENDIXIACOUNTANTS’REPORT

–I-41–

---

(i)Financialiabilitiesandequityinstruments

Clasificationasdebtorequity

Debtandequityinstrumentsareclasifiedaseitherfinancialiabilitiesorasequityin

acordancewiththesubstanceofthecontractualarangementsandthedefinitionsofafinancial

liabilityandanequityinstrument.

Financialiabilitiesatamortisedcost

Financialiabilitiesatamortisedcostaresubsequentlymeasuredatamortisedcost,usingthe

efectiveinterestmethod.Therelatedinterestexpenseisrecognisedinprofitorlos.Gainsor

losesarerecognisedinprofitorloswhentheliabilitiesarederecognisedaswelasthroughthe

amortisationproces.

Equityinstruments

Anequityinstrumentisanycontracthatevidencesaresidualinterestintheasetsofan

entityafterdeductingalofitsliabilities.EquityinstrumentsisuedbytheCompanyare

recognisedatheprocedsreceived,netofdirectisuecosts.

Derecognitionofinancialiabilities

TheGroupderecognisesfinancialiabilitieswhen,andonlywhen,theGroup’sobligationsare

discharged,canceledorhavexpired.Thediferencebetwenthecaryingamountofthefinancial

liabilityderecognisedandtheconsiderationpaidandpayableisrecognisedinprofitorlos.

(u)Provisionsandcontingentliabilities

ProvisionsarerecognisedforliabilitiesofuncertaintimingoramountwhentheGrouphasa

legalorconstructiveobligationarisingasaresultofapastevent,whichitisprobablewilresult

inanoutflowofeconomicbenefitsthatcanbereliablyestimated.

Whereitisnotprobablethatanoutflowofeconomicbenefitswilberequired,ortheamount

canotbestimatedreliably,theobligationisdisclosedasacontingentliability,unlesthe

probabilityofoutflowofeconomicbenefitsisremote.Posibleobligations,thexistenceofwhich

wilonlybeconfirmedbytheocurenceornon-ocurenceofoneormorefuturevents,arealso

disclosedascontingentliabilitiesunlestheprobabilityofoutflowofeconomicbenefitsisremote.

APENDIXIACOUNTANTS’REPORT

–I-42–

---

(v)Relatedparties

(i)Apersonoraclosememberofthatperson’sfamilyisrelatedtotheGroupifthat

person:

(a)hascontrolorjointcontrolovertheGroup;

(b)hasignificantinfluenceovertheGroup;or

(c)isamemberofkeymanagementpersoneloftheGrouportheCompany’sparent.

(i)AnentityisrelatedtotheGroupifanyofthefolowingconditionsaply:

(a)ThentityandtheGrouparemembersofthesamegroup(whichmeansthateach

parent,subsidiaryandfelowsubsidiaryisrelatedtotheothers).

(b)Onentityisanasociateorjointventureoftheotherentity(oranasociateor

jointventureofamemberofagroupofwhichtheotherentityisamember).

(c)Bothentitiesarejointventuresofthesamethirdparty.

(d)Onentityisajointventureofathirdentityandtheotherentityisanasociateof

thethirdentity.

(e)Thentityisapost-employmentbenefitplanforthebenefitofthemployesof

theGrouporanentityrelatedtotheGroup.

(f)Thentityiscontroledorjointlycontroledbyapersonidentifiedin(i).

(g)Apersonidentifiedin(i)(a)hasignificantinfluenceoverthentityorisa

memberofkeymanagementpersonelofthentity(orofaparentofthentity).

(h)Thentity,oranymemberofagroupofwhichitisapart,provideskey

managementpersonelservicestotheGrouportotheGroup’sparent.

(i)Closemembersofthefamilyofapersonarethosefamilymemberswhomaybe

expectedtoinfluence,orbeinfluencedby,thatpersonintheirdealingswiththentity

andinclude:

(a)thatperson’schildrenandspouseordomesticpartner;

APENDIXIACOUNTANTS’REPORT

–I-43–

---

(b)childrenofthatperson’spouseordomesticpartner;and

(c)dependentsofthatpersonorthatperson’spouseordomesticpartner.

(w)Treasuryshares

OwnequityinstrumentswhicheldbytheCompanyortheGroup(treasuryshares)are

recognizedirectlyinequityatcost.Nogainorlosisrecognizedintheconsolidatedstatements

ofprofitorlosandothercomprehensiveincomeonthepurchase,sale,isueorcancelationofthe

Group’sownequityinstruments.

5.KEYSOURCESOFESTIMATIONUNCERTAINTY

IntheaplicationoftheGroup’sacountingpolicies,whicharedescribedinNote4,the

directorsoftheCompanyarerequiredtomakejudgements,estimatesandasumptionsabouthe

caryingamountsofasetsandliabilitiesthatarenotreadilyaparentfromothersources.The

estimates,judgementsandasociatedasumptionsarebasedonhistoricalexperienceandother

factorsthatareconsideredtoberelevant.Actualresultsmaydiferfromthesestimates.

Thestimatesandunderlyingasumptionsarereviewedonanon-goingbasis.Revisionsto

acountingestimatesarerecognisedintheperiodinwhichthestimateisrevisediftherevision

afectsonlythatperiod,orintheperiodoftherevisionandfutureperiodsifrevisionafectsboth

curentandfutureperiods.

Thefolowingarekeyasumptionsconcerningthefuture,andotherkeysourcesofestimation

uncertaintyathendofeachreportingperiodthatmayhaveasignificantriskofcausinga

materialadjustmentothecaryingamountsofasetsandliabilitieswithinthenextfinancialyear.

Keysourcesofestimationuncertainty

Usefulivesandestimatedimpairmentonproperty,plantandequipment

TheGroupdeterminesthestimatedusefulives,residualvaluesandrelatedepreciation

chargesforitsproperty,plantandequipment.Thisestimateisbasedonthehistoricalexperienceof

theactualusefulivesofproperty,plantandequipmentofsimilarnatureandfunctions.TheGroup

wilincreasethedepreciationchargeswhereusefulivesarelesthanpreviouslyestimatedlives,

orwilwrite-oforwrite-downtechnicalyobsoleteornon-strategicasetsthathaveben

abandonedorsold.

APENDIXIACOUNTANTS’REPORT

–I-44–

---

TheGroupregularlyreviewswhetherthereareanyindicationsofimpairmentandrecognises

animpairmentlosifthecaryingamountofanasetislowerthanitsrecoverableamount.The

Grouptestsforimpairmentforproperty,plantandequipmentwheneverthereisanindicationthat

theasetmaybeimpaired.Therecoverableamountshavebendeterminedbasedonthehigherof

valueinuseandfairvaluelescostsofdisposal.Thesecalculationsrequiretheuseofestimates,

suchasdiscountrates,futureprofitabilityandgrowthrates.

Usefulivesandestimatedimpairmentonintangibleasets

TheGroup’smanagementdeterminestheusefulivesandrelatedamortisationchargesforits

intangibleasets.Thisestimateisbasedonthehistoricalexperienceoftheactualusefulivesof

intangibleasetsofsimilarnatureandfunctionsandmayvarysignificantlyasaresultoftechnical

inovationsandkencompetitionsfromcompetitors,resultinginhigheramortisationchargeand/or

write-oforwrite-downoftechnicalyobsoleteasetswhenusefulivesarelesthanpreviously

estimated.TheGroupwilincreasetheamortisationchargeswhereusefulivesarelesthan

previouslyestimatedlives,orwilwrite-oforwrite-downtechnicalyobsoleteornon-strategic

asetsthathavebenabandonedorsold.

TheGroupregularlyreviewswhetherthereareanyindicationsofimpairmentandrecognises

animpairmentlosifthecaryingamountofanasetislowerthanitsrecoverableamount.The

Grouptestsforimpairmentforintangibleasetswheneverthereisanindicationthatheasetmay

beimpaired.Therecoverableamountshavebendeterminedbasedonthehigherofvalueinuse

andfairvaluelescostsofdisposal.Thesecalculationsrequiretheuseofestimates,suchas

discountrates,futureprofitabilityandgrowthrates.

ProvisionofECLforfinancialasetsatamortisedcost

TheGroupcalculatesECLfortradeandothereceivablesandcashandcashequivalentunder

IFRS9.TheprovisionratesarebasedontheGroup’shistoricaldefaultratestakinginto

considerationforward-lokinginformationthatisreasonableandsuportableavailablewithout

unduecostsorefort.Ateveryreportingdate,thehistoricalobservedefaultratesarereasesed

andchangesintheforward-lokinginformationareconsidered.

TheprovisionofECLisensitivetochangesinestimates.Detailsofthekeyasumptionsand

inputsusedaresetoutinNote37.Changesintheseasumptionsandestimationcouldmaterialy

afectheasesmentanditmaybenecesarytomakeaditionalosalowanceinfutureperiods.

APENDIXIACOUNTANTS’REPORT

–I-45–

---

FairvaluemeasurementsforfinancialasetsatFVTPL

TheGrouphasmadevariousinvestmentsduringtheRelevantPeriodsasetoutinote23.

TheGroupacountsforthesefinancialinstrumentsasfinancialasetsatFVTPL.Forthose

investmentswithnoquotedmarketpricesinanactivemarket,theirfairvaluesarestimatedby

usingvaluationtechniques.ThesetechniquesincludethosefurtherdescribedinNote39underthe

heading“Fairvaluemanagement”.Valuationtechniquesarecertifiedbyindependentand

recognisedbusinesvaluerbeforebeingimplementedforvaluationandarecalibratedtoensure

thatoutputsreflectmarketconditions.Valuationmodelsestablishedbythevaluermakethe

maximumuseofmarketinputsandrelyaslitleasposibleontheGroup’specificdata.However,

someinputs,suchasprobabilityofredemptionofpreferenceshares,requiremanagementestimates

andasumptions,whicharereviewedperiodicalyandadjustedifnecesary.Shouldanyofthe

estimatesandasumptionsbechanged,itmayleadtoachangeinthefairvalueofthefinancial

asets.

Netrealisablevalueofinventories

Inventoriesarestatedathelowerofcostandnetrealisablevalue.Costsisdeterminedona

weighted-averagebasisand,incaseofworkinprogresandfinishedgods,comprisesdirect

materials,directlabourandanapropriateproportionofoverheads.Netrealisablevalueof

inventoriesisthestimatedselingpriceintheordinarycourseofbusines,lesestimatedcostsof

completionandselingexpenses.Thesestimatesarebasedonthecurentmarketconditionand

thehistoricalexperienceofmanufacturingandselingproductsofsimilarnature.Inadition,these

estimatescouldchangesignificantlyasaresultofchangeincustomerpreference,environmental

goalsandcompetitoractionsinresponsetoindustrycycles.Managementmeasuresthesestimates

athendofeachreportingperiod.

6.SEGMENTINFORMATIONANDREVENUE

Forthepurposesofasesingperformanceandalocatingresources,theGroup’soperationis

regardedasonereportableoperatingsegmentwhichistheSiCsubstratesegment.Thesegment

engagesinresearchandevelopment,manufacturingandsalesofSiCsubstrates.Thexecutive

directorsoftheCompanyreviewthefinancialperformanceandpositionfortheperiodofthe

Groupasawhole.Acordingly,nosegmentinformationispresented.

TheGroup’srevenuestreamsarecategorisedasfolows:

—SalesofSiCsemiconductormaterial;and

—Others

APENDIXIACOUNTANTS’REPORT

–I-46–

---

AnanalysisoftheGroup’srevenueisasfolows:

Yearended31DecemberThremonthsended31March

RMB’000RMB’000RMB’000RMB’000RMB’000

(Unaudited)

SalesofSiCsemiconductor

material

.

326,0191,085,8021,473,688333,325329,268

Others

.

91,016164,894290,72392,74377,085

Contractswithcustomers

.

417,0351,250,6961,764,411426,068406,353

Yearended31DecemberThremonthsended31March

RMB’000RMB’000RMB’000RMB’000RMB’000

(Unaudited)

Revenuefromcontractswith

customersbytimingof

recognitionwithinIFRS15

Pointintime

.

417,0351,250,6961,762,900426,068405,722

Overtime

.

—1,511—631

Contractwithcustomers

.

417,0351,250,6961,764,411426,068406,353

Revenuefromothersources

Rentalincome

.

—3,730—1,608

Thefolowingtableprovidesinformationaboutradereceivablesandcontractliabilitiesfrom

contractswithcustomers.

Asat31December

Asat31

March

RMB’000RMB’000RMB’000RMB’000

Tradereceivables(Note25)

.

138,002308,783520,264529,992

Contractliabilities(Note30)

.

22,36099,31889,25484,352

Thecontractliabilitiesmainlyrelatetotheadvanceconsiderationreceivedfromcustomers.

APENDIXIACOUNTANTS’REPORT

–I-47–

---

TransactionPriceAlocatedtoFuturePerformanceObligations

IFRS15requiresthatheGrouptodisclosetheagregateamountoftransactionpricethatis

alocatedtoeachperformanceobligationthathasnotyetbensatisfiedasatyear-end.The

guidanceprovidescertainpracticalexpedientsthatlimithisrequirementand,therefore,forthe

vastmajorityofcontracts,theGroupdoesnotdisclosethevalueofunsatisfiedperformance

obligationsfor(i)contractswithanoriginalexpectedlengthofoneyearorlesand(i)contracts

forwhichrevenueisrecognisedatheamountowhichtheGrouphastherightoinvoicefor

servicesperformed.

Geographicalinformation

AnanalysisoftheGroup’srevenuefromexternalcustomers,basedonlocationofcustomers

andanalysedbyregion,ispresentedbelow:

Yearended31DecemberThremonthsended31March

RMB’000RMB’000RMB’000RMB’000RMB’000

(Unaudited)

Revenuefromexternalcustomers

—MainlandChina

.

364,641836,316918,944282,088211,254

—OutsideMainlandChina—

otheregionsandoverseas

countries

.

52,394414,380845,467143,980195,099

417,0351,250,6961,764,411426,068406,353

APENDIXIACOUNTANTS’REPORT

–I-48–

---

InformationaboutheGroup’snon-curentasetsexcludingfinancialasetsandeferedtax

asetsbygeographicalocationoftheasetsarepresentedbelow:

Asat31December

Asat31

March

RMB’000RMB’000RMB’000RMB’000

Non-curentasetsexcludingfinancial

asetsandeferedtaxasets

—MainlandChina

.

2,492,6994,067,8904,179,2514,132,430

—OutsideMainlandChina—other

regionsandoverseascountries

.

2,492,7164,067,9034,179,7194,132,899

Informationaboutmajorcustomers

Revenuefromcustomerscontributingover10%ofthetotalrevenueoftheGroupareas

folows:

Yearended31DecemberThremonthsended31March

RMB’000RMB’000RMB’000RMB’000RMB’000

(Unaudited)

Company1

.

108,344N/AN/AN/AN/A

Company2

.

58,349213,437N/AN/AN/A*

Company3

.

50,753N/AN/AN/AN/A

Company4

.

N/A*182,530308,90687,35551,009

Company5

.

N/AN/A336,051N/A*62,490

Company6

.

N/AN/AN/A66,098N/A

Company7

.

N/AN/AN/AN/A56,954

*Thecorespondingrevenuedidnotcontributeover10%ofthetotalrevenueoftheGroup.

APENDIXIACOUNTANTS’REPORT

–I-49–

---

7.OTHERGAINSANDLOSES,NET

Yearended31DecemberThremonthsended31March

RMB’000RMB’000RMB’000RMB’000RMB’000

(Unaudited)

Governmentgrantandothers

.

53,10050,80060,2849,99214,166

Netforeignexchange(los)/gain

.

(1,566)(868)11,0291,5483,819

(Los)/gainondisposalof

property,plantandequipment

.

(1)(346)403105—

Gainonearlyterminationof

leases

.

—7963—

VATinputaxdeduction

.

—5,18717,16612,075—

Total

.

51,53354,85288,94523,72017,985

8.NETINVESTMENTINCOME/(EXPENSE)

Yearended31DecemberThremonthsended31March

RMB’000RMB’000RMB’000RMB’000RMB’000

(Unaudited)

Changeinfairvalueofinancial

asetsatFVTPLinacordance

withIFRS9

.

36,22723,268762917(215)

9.(REVERSAL)/PROVISIONOFIMPAIRMENTLOSESONFINANCIALASETS

Yearended31DecemberThremonthsended31March

RMB’000RMB’000RMB’000RMB’000RMB’000

(Unaudited)

ImpairmentlosesunderECL

model,netofreversal

Tradeandbilsreceivables

.

(770)11,03610,9002,831(820)

Othereceivables

.

(287)(64)(734)(3)(218)

(1,057)10,97210,1662,828(1,038)

APENDIXIACOUNTANTS’REPORT

–I-50–

---

10.FINANCEINCOME/(EXPENSE),NET

Yearended31DecemberThremonthsended31March

RMB’000RMB’000RMB’000RMB’000RMB’000

(Unaudited)

Interestincome

.

18,26215,43714,2393,2973,921

Interestexpensesonborowings

.

—(3)(7,942)(22)(5,914)

Interestexpensesonlease

liabilities

.

(127)(214)(393)(131)(39)

18,13515,2205,9043,144(2,032)

11.(LOS)/PROFITBEFORETAX

(Los)/profitbeforetaxhasbenarivedataftercharging/(crediting):

Yearended31DecemberThremonthsended31March

RMB’000RMB’000RMB’000RMB’000RMB’000

(Unaudited)

Costofinventories

.

441,0311,052,9171,305,264332,658309,371

Depreciationandamortisation

.

146,108226,754358,42385,67694,063

Inventorywritendown

.

8,95615,74322,4351,6645,260

Stafcosts(includingdirectors’

emoluments):

—Salariesandotherbenefits

.

119,683234,810265,04365,67868,090

—Retirementbenefitscheme

contributions

.

11,42520,90428,4147,0007,413

—Share-basedpayment

expenses

.

—10,209—5,194

Auditors’remuneration

.

1,3001,3001,300—

Short-termleaseswithaplication

ofrecognitionexemption

.

5525,7924,0142171,879

APENDIXIACOUNTANTS’REPORT

–I-51–

---

12.INCOMETAXCREDIT

Yearended31DecemberThremonthsended31March

RMB’000RMB’000RMB’000RMB’000RMB’000

(Unaudited)

Curentax

—PRCEnterpriseIncomeTax

(“EIT”)

.

9105011,4052161,116

—Others

.

2039111,386153—

—Overprovisioninrespectof

prioryear

.

(2,051)(18,062)(47)—

(938)(16,650)2,7443691,116

Deferedtax(Note22)

.

(320)6,211(22,505)(956)(4,274)

Totalincometaxcredit

.

(1,258)(10,439)(19,761)(587)(3,158)

UndertheLawofthePRConEnterpriseIncomeTax(the“EITLaw”)andImplementation

RegulationoftheEITLaw,thestandardEITrateofthePRCsubsidiariesis25%.ForthePRC

subsidiariesaprovedas“HighandNewTechnologyEnterprise”bytherelevantgovernment

authorities,theyaresubjectoapreferentialrateof15%.ForthePRCsubsidiariesaprovedas

“MicroandSmalEnterprise”bytherelevantgovernmentauthorities,whichtheanualtaxable

incomethatisnotmorethanRMB1,000,000shalbeincludedinitstaxableincomeathereduced

rateof12.5%foryearended31December2022andathereducedrateof25%foryearended31

December2023to2027,withtheaplicablenterpriseincometaxrateof20%.

ThegroupentitiesincorporatedinHongKongaresubjectoHongKongprofitstaxatarate

of16.5%onthestimatedasesableprofitsfortheyearsended31December2022,2023,2024

andthremonthsended31March2025.On21March2018,theHongKongLegislativeCouncil

pasedtheInlandRevenue(Amendment)(No.7)Bil2017(the“Bil”)whichintroducesthe

two-tieredprofitstaxratesregime.TheBilwasignedintolawon28March2018andwas

gazeteonthefolowingday.Underthetwo-tieredprofitstaxratesregime,thefirstHK$2,000,000

ofprofitsofqualifyingcorporationswilbetaxedat8.25%,andprofitsaboveHK$2,000,000wil

betaxedat16.5%.

Taxationarisingfromotherjurisdictionsiscalculatedatherateprevailingintherelevant

jurisdictions.

APENDIXIACOUNTANTS’REPORT

–I-52–

---

TheincometaxexpensefortheRelevantPeriodscanbereconciledtotheprofitbeforetax

pertheconsolidatedstatementsofprofitorlosandothercomprehensiveincomeasfolows:

Yearended31DecemberThremonthsended31March

RMB’000RMB’000RMB’000RMB’000RMB’000

(Unaudited)

(Los)/profitbeforetax

.

(176,940)(56,159)159,26445,5135,360

Taxatheaplicabletaxrateof

15%(note)

.

(26,541)(8,424)23,8906,827804

Efectofdiferentaxratesof

subsidiariesoperatinginother

jurisdictions

.

(3,467)8801,380370874

(Over)/underprovisionofcurent

taxinprioryear/period

.

(2,051)(18,062)(47)—

Taxefectofincomenotaxable

fortaxpurpose

.

(220)—(2,056)(348)(49)

Taxefectofexpensesnot

deductiblefortaxpurpose

.

866962,93233646

Taxefectofshareof

loses/(profits)ofasociates

.

—22320(24)225

Utilisationoftaxloses

previouslynotrecognised

.

—(8,652)(16,470)(8,624)(30)

Efectofdeductibletemporary

diferencesandtaxlosesnot

recognisedasdeferedtax

aset

.

47,09331,0395,9274,2171,226

Efectofsuperdeduction

.

(16,938)(16,397)(20,155)(3,341)(6,254)

Recognitionofpreviously

unrecognisedtaxloses

.

—(15,482)—

Efectofchangeontaxrateon

deferedtaxasetsandefered

taxliabilities

.

—9,059—

Incometaxcredit

.

(1,258)(10,439)(19,761)(587)(3,158)

Note:TheaplicabletaxrateiswithreferencetothepreferentialPRCtaxrateof15%astheincomederivingentities

whicharethePRCsubsidiariesaprovedas“HighandNewTechnologyEnterprise”bytherelevantgovernment

authoritiesundertheEITLawandImplementationRegulationoftheEITLawfortheyear/period.

APENDIXIACOUNTANTS’REPORT

–I-53–

---

13.DIRECTORS’ANDSUPERVISORS’EMOLUMENTS

DetailsofthemolumentspaidorpayabletothedirectorsandsupervisorsoftheCompany

fortheservicesprovidedtotheGroupduringtheRelevantPeriodsareasfolows:

Yearended31December2022

Directors’

fe

Salaries

andother

benefits

Performance-

basedbonus

Retirement

benefit

scheme

contributionsTotal

RMB’000RMB’000RMB’000RMB’000RMB’000

Chairman:

ZongYanmin

.

—3603,5001323,992

Executivedirectors:

ZhongWenqing(note(a)

.

—3,600—1323,732

GaoChao

.

—1,021960812,062

Non-executivedirectors:

WangHuan(note(m)

.

—

WuKunhong(note(c)

.

—

QuXiaoli(note(c)

.

—

Independentnon-executive

directors:

HanLi(note(e)

.

120—120

ZhaoXian(note(e)

.

120—120

LiXiangmin(note(k)

.

120—120

Supervisors:

ZhangHongyan

.

—21415971444

SongJian

.

—263—75338

YangLei(note(g)

.

—91—21112

3605,5494,61951211,040

APENDIXIACOUNTANTS’REPORT

–I-54–

---

Yearended31December2023

Directors’

fe

Salaries

andother

benefits

Performance-

basedbonus

Retirement

benefit

scheme

contributionsTotal

RMB’000RMB’000RMB’000RMB’000RMB’000

Chairman:

ZongYanmin

.

—3,600—1403,740

ExecutiveDirectors:

ZhongWenqing(note(a)

.

—1,341—1311,472

GaoChao

.

—1,201960982,259

Non-executivedirectors:

WangHuan(note(m)

.

—

WuKunhong(note(c)

.

—

QuXiaoli(note(c)

.

—

Independentnon-executive

directors:

HanLi(note(e)

.

180—180

ZhaoXian(note(e)

.

180—180

LiXiangmin(note(k)

.

180—180

Supervisors:

ZhangHongyan

.

—1878579351

SongJian

.

—330—86416

YangLei(note(g)

.

—80732119

5406,7391,0525668,897

APENDIXIACOUNTANTS’REPORT

–I-55–

---

Yearended31December2024

Directors’

fe

Salaries

andother

benefits

Performance-

basedbonus

Retirement

benefit

scheme

contributionsTotal

RMB’000RMB’000RMB’000RMB’000RMB’000

Chairman:

ZongYanmin

.

—3,6003001424,042

Executivedirectors:

ZhongWenqing(note(a)

.

—749810182

GaoChao

.

—1,209960952,264

Non-executivedirectors:

WangHuan(note(m)

.

—

HuangZhendong(note(i)

.

—

FangWei(note(b)

.

—

QiuYufeng(note(b)

.

230—230

WuKunhong(note(c)

.

—

QuXiaoli(note(c)

.

—

Independentnon-executive

directors:

LiXiangmin(note(k)

.

180—180

LiuHua(note(d)

.

150—150

LiHonghui(note(d)

.

150—150

HanLi(note(e)

.

30—30

ZhaoXian(note(e)

.

30—30

Supervisors:

ZhangHongyan

.

—41617259647

SongJian

.

—34022688654

ZhouMin(note(f)

.

—6510031196

YangLei(note(g)

.

—14—519

DouWentao(note(h)

.

—1203035185

7705,8381,8864658,959

APENDIXIACOUNTANTS’REPORT

–I-56–

---

Thremonthsended31March2024(Unaudited)

Directors’

fe

Salaries

andother

benefits

Performance-

basedbonus

Retirement

benefit

scheme

contributionsTotal

RMB’000RMB’000RMB’000RMB’000RMB’000

Chairman:

ZongYanmin

.

—900—35935

Executivedirectors:

ZhongWenqing(note(a)

.

—749810182

GaoChao

.

—300—25325

Non-executivedirectors:

WangHuan(note(m)

.

—

HuangZhendong(note(i)

.

—

FangWei(note(b)

.

—

QiuYufeng(note(b)

.

30—30

WuKunhong(note(c)

.

—

QuXiaoli(note(c)

.

—

Independentnon-executive

directors:

LiXiangmin(note(k)

.

45—45

LiuHua(note(d)

.

15—15

LiHonghui(note(d)

.

15—15

HanLi(note(e)

.

30—30

ZhaoXian(note(e)

.

30—30

Supervisors:

ZhangHongyan

.

—791316108

SongJian

.

—70—2292

ZhouMin(note(f)

.

—10—616

YangLei(note(g)

.

—14—519

1651,4471111191,842

APENDIXIACOUNTANTS’REPORT

–I-57–

---

Thremonthsended31March2025

Directors’

fe

Salaries

andother

benefits

Performance-

basedbonus

Retirement

benefit

scheme

contributionsTotal

RMB’000RMB’000RMB’000RMB’000RMB’000

Chairman:

ZongYanmin

.

—900—36936

Executivedirectors:

GaoChao

.

—300—26326

Non-executivedirectors:

WangHuan(note(m)

.

—

HuangZhendong(note(i)

.

—

FangWei(note(b)

.

—

QiuYufeng(note(b)

.

60—60

LiWanyue(note(j)

.

—

Independentnon-executive

directors:

LiXiangmin(note(k)

.

30—30

LiuHua(note(d)

.

45—45

LiHonghui(note(d)

.

45—45

LaiKwokHungAlex

(note(l)

.

30—30

Supervisors:

ZhangHongyan

.

—114—26140

SongJian

.

—90—25115

DouWentao(note(h)

.

—90925124

2101,49491381,851

Notes:

(a)ZhongWenqingresignedasexecutivedirectorsoftheCompanyon29February2024.

(b)FangWeiandQiuYufengwereapointedasnon-executivedirectorsoftheCompanyon29February2024.

(c)WuKunhongandQuXiaoliresignedasnon-executivedirectorsoftheCompanyon29February2024.

APENDIXIACOUNTANTS’REPORT

–I-58–

---

(d)LiuHuandLiHonghuiwereapointedasindependentnon-executivedirectorsoftheCompanyon29February

2024.

(e)HanLiandZhaoXianresignedasindependentnon-executivedirectorsoftheCompanyon29February2024.

(f)ZhouMinwasapointedasupervisorsoftheCompanyon29February2024andresignedasupervisorsofthe

Companyon22August2024.

(g)YangLeiresignedasupervisorsoftheCompanyon29February2024.

(h)DouWentaowasapointedasupervisorsoftheCompanyon22August2024.

(i)HuangZhendongwasapointedasnon-executivedirectorsoftheCompanyon29February2024andresignedas

independentnon-executivedirectorsoftheCompanyon19February2025.

(j)LiWanyuewasapointedasnon-executivedirectorsoftheCompanyon19February2025.

(k)LiXiangminresignedasindependentnon-executivedirectorsoftheCompanyon19February2025.

(l)LaiKwokHungAlexwasapointedasindependentnon-executivedirectorsoftheCompanyon19February2025.

(m)WangHuanresignedasnon-executivedirectorsoftheCompanyon30April2025.

14.FIVEHIGHESTPAIDINDIVIDUALS

Duringtheyearended31December2022,2023and2024andthremonthsended31March

2024and2025thefiveindividualswiththehighestemolumentsintheGroupinclude3,2,2,1

(unaudited)and1directorsoftheCompany,detailsofwhoseremunerationaresetoutinNote13

above.ThemolumentsofthefivehighestpaidindividualsduringtheRelevantPeriodswereas

folows:

Yearended31DecemberThremonthsended31March

RMB’000RMB’000RMB’000RMB’000RMB’000

(Unaudited)

Salariesandotherbenefits

.

7,87310,62411,8262,7872,788

Performance-basedbonus

.

5,6402,5201,760—

Retirementbenefitscheme

contributions

.

13,98613,65614,0872,9072,969

APENDIXIACOUNTANTS’REPORT

–I-59–

---

Themolumentsofthefivehighestpaidindividualswerewithinthefolowingbands:

Numberofindividuals

Yearended31DecemberThremonthsended31March

(Unaudited)

NiltoRMB1,000,000

.

—55

RMB1,000,001to

RMB1,500,000

.

—

RMB1,500,001to

RMB2,000,000

.

111—

RMB2,000,001to

RMB2,500,000

.

121—

RMB2,500,001to

RMB3,000,000

.

1—1—

RMB3,000,001to

RMB3,500,000

.

—11—

RMB3,500,001to

RMB4,000,000

.

21—

RMB4,000,001toRMB4,500,000—1—

DuringtheRelevantPeriods,noemolumentswerepaidbytheGrouptothedirectorsofthe

Companyorthefivehighestpaidindividuals(includingdirectorsandemployes)asan

inducementojoinoruponjoiningtheGrouporascompensationforlosofofice.Noneofthe

directorsoftheCompanyhavewaivedanyemolumentsduringtheRelevantPeriods.

APENDIXIACOUNTANTS’REPORT

–I-60–

---

15.(LOS)/EARNINGSPERSHARE

(a)Basic(los)/earningspershare

Thecalculationofthebasic(los)/earningspershareatributetownersoftheCompanyis

basedonthefolowingdata:

Yearended31DecemberThremonthsended31March

RMB’000RMB’000RMB’000RMB’000RMB’000

(Unaudited)

(Los)/earningsforthepurposeof

calculatingbasicearningsper

share

.

(175,682)(45,720)179,02546,1008,518

Numberofshares:

Yearended31DecemberThremonthsended31March

(Unaudited)

Weightedaveragenumberof

ordinarysharesinisue,

excludingtreasurysharesheld

forestrictedshareschemeas

thesesharesarenotconsidered

outstandingforthepurposeof

calculatingbasicearningsper

share

.

426,130,119429,711,044428,177,262429,464,810427,705,160

APENDIXIACOUNTANTS’REPORT

–I-61–

---

(b)Dilutedearningspershare

ThecalculationofthedilutedearningspershareatributetownersoftheCompanyisbased

onthefolowingdata:

Yearended31DecemberThremonthsended31March

RMB’000RMB’000RMB’000RMB’000RMB’000

(Unaudited)

(Los)/earningsforthe

year/periodatributableto

ownersoftheCompanyand

thepurposeofcalculating

dilutedearningspershare

.

(175,682)(45,720)179,02546,1008,518

ThecalculationofthedilutedearningspershareatributetownersoftheCompanyisbased

onthefolowingdata:

Numberofshares:

Yearended31DecemberThremonthsended31March

(Unaudited)

Weightedaveragenumberof

ordinarysharesforthepurpose

ofcalculatingbasicearnings

pershares

.

426,130,119429,711,044428,177,262429,464,810427,705,160

Efectofrestrictedshares

.

—48,091—153,877

Weightedaveragenumberof

ordinarysharesforthepurpose

ofcalculatingdilutedearnings

pershare

.

426,130,119429,711,044428,225,353429,464,810427,859,037

16.DIVIDENDS

NodividendwaspaidorproposeduringtheRelevantPeriods.Nofinaldividendswere

declaredbytheBoardfortheRelevantPeriods.

APENDIXIACOUNTANTS’REPORT

–I-62–

---

17.INVESTMENTSINSUBSIDIARIES

Asat31December

Asat31

March

RMB’000RMB’000RMB’000RMB’000

Company

Investmentsinsubsidiaries

.

—Unlistedshares,atcost

.

434,213434,213474,3941,026,105

TheCompanyhadirectandindirectequityinterestsinthefolowingprincipalsubsidiaries

duringtheRelevantPeriods:

Nameofsubsidiaries

Placeand

dateof

incorporation

establishment

Authorisedshares

capital/

registeredcapital

EquityinterestsatributabletotheCompanyasat

Principalactivities31December202231December202331December202431March2025

DirectIndirectDirectIndirectDirectIndirectDirectIndirect

%

上海天岳半导体材料有限

公司(Shanghai

TianyueSemiconductor

MaterialsCo.,Ltd.)

(a),(b)*.

thePRC/MainlandChina,

2June2020

RMB900,000,000100—100—100—100—Researchandevelopment,

manufacturingandsales

ofSiCsubstrates

深圳天岳先进科技有限公

司(ShenzhenTianyue

AdvancedTechnology

Co.,Ltd.)(a),*.

thePRC/MainlandChina,

19October2022

RMB100,000,000100—100—100—100—Researchandevelopment,

manufacturingandsales

ofSiCsubstrates

山东天岳新材料技术有限

公司(Shandong

TianyueNewMaterials

TechnologyCo.,Ltd.)

(a).

thePRC/MainlandChina,

15November2017

RMB95,000,000100—100—100—100—Researchandevelopment

ofSiCsubstrates

济宁天岳半导体新材料

有限公司(Jining

TianyueSemiconductor

NewMaterialsCo.,

Ltd.)(a),(c).

thePRC/MainlandChina,

5June2023

RMB50,000,000N/AN/A100—100—100—Researchandevelopment,

manufacturingandsales

ofSiCsubstrates

APENDIXIACOUNTANTS’REPORT

–I-63–

---

Nameofsubsidiaries

Placeand

dateof

incorporation

establishment

Authorisedshares

capital/

registeredcapital

EquityinterestsatributabletotheCompanyasat

Principalactivities31December202231December202331December202431March2025

DirectIndirectDirectIndirectDirectIndirectDirectIndirect

%

北京天岳先进科技有限公

司(BeijingTianyue

AdvancedTechnology

Co.,Ltd.)(a),*.

thePRC/MainlandChina,

5January2024

RMB20,000,000N/AN/AN/AN/A100—100—Researchandevelopment

ofSiCsubstrates

SICGLOBAL

株式会社

.

Japan,

8June2020

JPY3,300,000,000100—100—100—100—SalesofSiCsubstrates

上海越服科贸有限公司

(ShanghaiYuefu

Technology&Trading

Co.,Ltd,)(a)*.

thePRC/MainlandChina,

6December2019

RMB10,000,000100—100—100—100—SalesofSiCsubstrates

SakuraTechnologies

株式会社*

.

Japan,15May2020JPY30,000,000—100—100—100—100SalesofSiCsubstrates

上海越联峰科技有限公司

(ShanghaiYuelianfeng

TechnologyCo.,Ltd.)

(a).

thePRC/MainlandChina,

22July2022

RMB50,000,000100—100—100—100—Researchandevelopment

andsalesofSiC

substrates

极领投资有限公司(Sky

SpurInvestment

Limited).

HongKong,

14October2022

USD20,000—100—100—100—100SalesofSiCsubstrates

VisionaryHorizonPTE.

Ltd.

Singapore,

2November2022

USD100,000—100—100—100—100Investmentholding

SIC-Europe-GabH.Germany,

2March2023

EUR25,000N/AN/A—100—100—100SalesofSiCsubstrates

Notes:

(a)TheEnglishnamesofthesubsidiariesregisteredintheMainlandChinaofthePRCrepresenthebestefortsmade

bymanagementoftheCompanytotranslatetheirChinesenamesastheydonothaveoficialEnglishnames.

(b)TheregisteredcapitalofthesubsidiaryoftheCompanywasincreasedfromRMB400,000,000toRMB900,000,000

inMarch2025.

(c)Thesubsidiarywasformerlyknownas济宁天岳石墨制品有限公司(JiningTianyueGraphiteProductsCo.,Ltd.).

Alofthesubsidiariesadopted31Decemberastheirfinancialyearendate.

APENDIXIACOUNTANTS’REPORT

–I-64–

---

*ThestatutoryfinancialstatementsofcertainsubsidiariesintheMainlandChinaofthePRCfortheyearsended31

December2022,2023and2024werepreparedinacordancewithrelevantacountingprinciplesandfinancial

regulationsaplicableinthePRCandwereauditedbyBDOChinaShuLunPanCertifiedPublicAcountantsLP.

NostatutoryauditedfinancialstatementswerepreparedforcertainentitiesestablishedinHongKong,Mainland

China,Germany,Singapore,andJapansincetheirdateofincorporationastheyareincorporatedinajurisdiction

wheretherearenolocalstatutoryauditrequirementsorexemptedfromstatutoryauditrequirements.

*ThesubsidiaryoftheCompanyisundertheprocesofde-registrationasat31March2025.

18.INVESTMENTSINASOCIATES

Asat31December

Asat31

March

RMB’000RMB’000RMB’000RMB’000

Group

Atbeginingoftheyear/period

.

—26,59326,899

Aditions

.

—3,2502,842—

Shareofpost-acquisitionloses

.

—(148)(2,131)(1,502)

Shareofpost-acquisitionshare

premium

.

—23,491—

Other

.

—(405)—

Athendoftheyear/period

.

—26,59326,89925,397

Asat31December

Asat31

March

RMB’000RMB’000RMB’000RMB’000

Company

Atbeginingoftheyear/period

.

—26,59324,073

Aditions

.

—3,250—

Shareofpost-acquisitionloses

.

—(148)(2,115)(1,114)

Shareofpost-acquisitionshare

premium

.

—23,491—

Other

.

—(405)—

Athendoftheyear/period

.

—26,59324,07322,959

APENDIXIACOUNTANTS’REPORT

–I-65–

---

TheGrouphadinterestsinthefolowingprincipalasociatesduringtheRelevantPeriods:

PercentageofownershipinterestsheldbytheGroupasat

Nameofasociates

Placeof

incorporation/

establishmentand

operation

Authorisedshares

capital/registered

capitalAsat31DecemberAsat31MarchPrincipalactivities

苏州达波新材科技有限

公司(SuzhouDabo

NewMaterials

TechnologyCo.,Ltd.)

.

PRCRMB12,275,000N/A26.48%26.48%26.48%Researchand

developmentof

semiconductor

materials

岱沃(深圳)半导体技术有

限责任公司(Daiwo

(Shenzhen)

Semiconductor

TechnologyCo.,Ltd.)

PRCRMB7,105,000N/AN/A40.00%40.00%Productionandsaleof

machinery

Note:InJune2025,theCompanyenteredintoanagrementwithathirdpartytotransfer2.5%equityinterestofSuzhou

DaboNewMaterialsTechnologyCo.,Ltd.ataconsiderationofRMB15milion.

AgregateinformationofasociatesoftheGroupthatarenotindividualymaterial:

Asat31December

Asat31

March

RMB’000RMB’000RMB’000RMB’000

Agregatecaryingamountofthe

Group’s

asociatesintheHistorical

FinancialInformation

.

N/A26,59326,89925,397

Yearended31December

Asat31

March

RMB’000RMB’000RMB’000RMB’000

Shareoflosesofasociates

.

N/A(148)(2,131)(1,502)

APENDIXIACOUNTANTS’REPORT

–I-66–

---

19.PROPERTY,PLANTANDEQUIPMENT

Propertyand

buildings

Production

equipment

Transportation

vehicle

Electronic

equipment

Ofice

equipment

Construction

inprogres

Leasehold

improvementTotal

RMB’000RMB’000RMB’000RMB’000RMB’000RMB’000RMB’000RMB’000

Group

Cost

Asat1January2022

.

243,6971,212,4062,4382,3731,129263,878—1,725,921

Aditions

.

254103,597922,281220937,55715,6771,059,678

Transferedfromconstructioninprogres

.

53,938119,922—2,709—(176,569)—

Disposals/writenof

.

—(1)—(1)

Asat31December2022and

1January2023

.

297,8891,435,9252,5307,3621,3491,024,86615,6772,785,598

Aditions

.

273322,7489522,1221,8261,302,5464,0081,634,475

Transferedfromconstructioninprogres

.

1,194,662922,005265,803—(2,122,496)—

Disposals/writenof

.

—(575)(203)(111)—(889)

Asat31December2023and

1January2024

.

1,492,8242,680,1033,30515,1763,175204,91619,6854,419,184

Aditions

.

—67,4811,002930705368,6727,408446,198

Transferedfromconstructioninprogres

.

229,408218,9364695,845—(479,513)24,855—

Disposals/writenof

.

—(6,860)(498)—(7,358)

Exchangediference

.

—6—6

Asat31December2024and

1January2025

.

1,722,2322,959,6604,27821,9573,88094,07551,9484,858,030

Aditions

.

—19819713850,8542,41753,804

Transferedfromconstructioninprogres

.

10,92330,682—(41,605)—

Asat31March2025

.

1,733,1552,990,3424,47622,1544,018103,32454,3654,911,834

Depreciation

Asat1January2022

.

37,577394,4088401,312520—434,657

Providedfortheyear

.

8,431124,6575401,087178—337135,230

Asat31December2022and

1January2023

.

46,008519,0651,3802,399698—337569,887

Providedfortheyear

.

24,088178,4186363,963371—3,407210,883

Eliminatedondisposals/writenof

.

—(92)(196)(106)—(394)

Asat31December2023and

1January2024

.

70,096697,3911,8206,2561,069—3,744780,376

Providedfortheyear

.

53,667266,0297475,212623—9,873336,151

Eliminatedondisposal/writenof

.

—(5,247)(418)—(5,665)

Asat31December2024and

1January2025

.

123,763958,1732,14911,4681,692—13,6171,110,862

Providedfortheperiod

.

14,13867,2931851,584167—4,62587,992

Asat31March2025

.

137,9011,025,4662,33413,0521,859—18,2421,198,854

Netbokvalue

Asat31December2022

.

251,881916,8601,1504,9636511,024,86615,3402,215,711

Asat31December2023

.

1,422,7281,982,7121,4858,9202,106204,91615,9413,638,808

Asat31December2024

.

1,598,4692,001,4872,12910,4892,18894,07538,3313,747,168

Asat31March2025

.

1,595,2541,964,8762,1429,1022,159103,32436,1233,712,980

APENDIXIACOUNTANTS’REPORT

–I-67–

---

Propertyand

buildings

Production

equipment

Transportation

vehicle

Electronic

equipment

Ofice

equipment

Construction

inprogres

Leasehold

improvementTotal

RMB’000RMB’000RMB’000RMB’000RMB’000RMB’000RMB’000RMB’000

Company

Cost

Asat1January2022

.

222,814917,6631,9371,9291,108115,520—1,260,971

Aditions

.

21,137290,272102,373241204,48115,677534,191

Transferedfromconstructioninprogres

.

53,938119,922—2,709—(176,569)—

Asat31December2022and

1January2023

.

297,8891,327,8571,9477,0111,349143,43215,6771,795,162

Aditions

.

2737,9842631,487272100,4223,373114,074

Transferedfromconstructioninprogres

.

—38,400265,803—(44,229)—

Disposals/writenof

.

—(575)(203)(110)—(888)

Asat31December2023and

1January2024

.

298,1621,373,6662,03314,1911,621199,62519,0501,908,348

Aditions

.

—30,92712841968893,5586,445132,165

Transferedfromconstructioninprogres

.

216,89347,8514692,877—(292,945)24,855—

Disposals/writenof

.

—(6,860)—(6,860)

Asat31December2024and

1January2025

.

515,0551,445,5842,63017,4872,30923850,3502,033,653

Aditions

.

—19819613823,48062024,632

Transferedfromconstructioninprogres

.

—3,376—(3,376)—

Asat31March2025

.

515,0551,448,9602,82817,6832,44720,34250,9702,058,285

Depreciation

Asat1January2022

.

36,273252,9996871,033511—291,503

Providedfortheyear

.

9,736165,0094211,191187—337176,881

Asat31December2022and

1January2023

.

46,009418,0081,1082,224698—337468,384

Providedfortheyear

.

10,132135,9854253,823236—3,389153,990

Eliminatedondisposals/writenof

.

—(92)(196)(105)—(393)

Asat31December2023and

1January2024

.

56,141553,9011,3375,942934—3,726621,981

Providedfortheyear

.

14,772143,2614074,246324—9,463172,473

Eliminatedondisposal/writenof

.

—(5,247)—(5,247)

Asat31December2024and

1January2025

.

70,913691,9151,74410,1881,258—13,189789,207

Providedfortheperiod

.

4,32733,098861,24092—2,70641,549

Asat31March2025

.

75,240725,0131,83011,4281,350—15,895830,756

Netbokvalue

Asat31December2022

.

251,880909,8498394,787651143,43215,3401,326,778

Asat31December2023

.

242,021819,7656968,249687199,62515,3241,286,367

Asat31December2024

.

444,142753,6698867,2991,05123837,1611,244,446

Asat31March2025

.

439,815723,9479986,2551,09720,34235,0751,227,529

InviewofunfavourableoperatingperformanceoftheGroupfortheyearended31December

2022and2023,theGroupasesedwhetherimpairmentindicationsforthenon-curent

non-financialasetsoftheGroupexistedat31December2022and2023.Acordingly,theGroup

performedimpairmentasesmentforthenon-curentnon-financialasets,whichmainlyconsistof

property,plantandequipment,intangibleasets(note20),right-of-useasets(note21),and

prepaymentsforacquisitionofproperty,plantandequipment(note24)oftheGroupforespective

years.

APENDIXIACOUNTANTS’REPORT

–I-68–

---

Forthepurposesofimpairmentesting,theGroupestimatestherecoverableamountof

cash-generatingunit(“CGU”).TherecoverableamountsoftheCGUweredeterminedbasedonthe

valueinusecalculation.Thevalueinusewasestimatedwithreferencetothecashflow

projectionsbasedonthefinancialbudgetsandforecastaprovedbythetopmanagement.Basedon

theresultsoftheasesment,therecoverableamountsofnon-curentnon-financialasetsexced

thecaryingamountsofnon-curentnon-financialasetsathendofyearended31December

2022and2023.Acordingly,noimpairmentloshasbenprovidedforthenon-curent

non-financialasetsoftheGroupfortherespectiveyears.

20.INTANGIBLEASETS

Group

SoftwareTrademarkTotal

RMB’000RMB’000RMB’000

COST

Asat1January2022

.

3,008—3,008

Aditions

.

3,0493,0186,067

Asat31December2022and1January

.

6,0573,0189,075

Aditions

.

6,288—6,288

Asat31December2023and1January

.

12,3453,01815,363

Aditions

.

12,818—12,818

Asat31December2024and1January

.

25,1633,01828,181

Aditions

.

433—433

Asat31March2025

.

25,5963,01828,614

Amortisation

Asat1January2022

.

865—865

Providedfortheyear

.

1,4381761,614

Asat31December2022and1January

.

2,3031762,479

Providedfortheyear

.

2,6393022,941

Asat31December2023and1January

.

4,9424785,420

Providedfortheyear

.

4,6023024,904

Asat31December2024and1January

.

9,54478010,324

Providedfortheperiod

.

1,925752,000

Asat31March2025

.

11,46985512,324

Netbokvalue

Asat31December2022

.

3,7542,8426,596

Asat31December2023

.

7,4032,5409,943

Asat31December2024

.

15,6192,23817,857

Asat31March2025

.

14,1272,16316,290

APENDIXIACOUNTANTS’REPORT

–I-69–

---

Company

SoftwareTrademarkTotal

RMB’000RMB’000RMB’000

COST

Asat1January2022

.

3,008—3,008

Aditions

.

3,0493,0186,067

Asat31December2022and1January

.

6,0573,0189,075

Aditions

.

6,288—6,288

Asat31December2023and1January

.

12,3453,01815,363

Aditions

.

5,422—5,422

Asat31December2024and1January

.

17,7673,01820,785

Aditions

.

433—433

Asat31March2025

.

18,2003,01821,218

Amortisation

Asat1January2022

.

865—865

Providedfortheyear

.

1,4381761,614

Asat31December2022and1January

.

2,3031762,479

Providedfortheyear

.

2,6393022,941

Asat31December2023and1January

.

4,9424785,420

Providedfortheyear

.

3,9863024,288

Asat31December2024and1January

.

8,9287809,708

Providedfortheperiod

.

1,476751,551

Asat31March2025

.

10,40485511,259

Netbokvalue

Asat31December2022

.

3,7542,8426,596

Asat31December2023

.

7,4032,5409,943

Asat31December2024

.

8,8392,23811,077

Asat31March2025

.

7,7962,1639,959

APENDIXIACOUNTANTS’REPORT

–I-70–

---

21.RIGHT-OF-USEASETS

Detailsoftheright-of-useasetsrecognisedandmovementsduringtheyears/period:

Group

Landuserights

Propertyand

buildingsTotal

RMB’000RMB’000RMB’000

Costs

Asat1January2022

.

291,3301,977293,307

Aditions

.

—7,4517,451

Asat31December2022and

1January2023

.

291,3309,428300,758

Aditions

.

23,51519,56843,083

Disposals

.

—(5,042)(5,042)

Asat31December2023and

1January2024

.

314,84523,954338,799

Aditions

.

—2,1982,198

Disposals

.

—(6,300)(6,300)

Asat31December2024,1January2025

and31March2025

.

314,84519,852334,697

Depreciation

Asat1January2022

.

39,31718439,501

Providedfortheyear

.

5,8973,3679,264

Asat31December2022and

1January2023

.

45,2143,55148,765

Providedfortheyear

.

6,3676,56312,930

Eliminatedondisposals

.

—(4,341)(4,341)

Asat31December2023and

1January2024

.

51,5815,77357,354

Providedfortheyear

.

6,36811,00017,368

Eliminatedondisposals

.

—(5,476)(5,476)

Asat31December2024and

1January2025

.

57,94911,29769,246

Providedfortheperiod

.

1,5922,4794,071

Asat31March2025

.

59,54113,77673,317

Caryingamounts

Asat31December2022

.

246,1165,877251,993

Asat31December2023

.

263,26418,181281,445

Asat31December2024

.

256,8968,555265,451

Asat31March2025

.

255,3046,076261,380

APENDIXIACOUNTANTS’REPORT

–I-71–

---

Company

Landuserights

Propertyand

buildingsTotal

RMB’000RMB’000RMB’000

Costs

Asat1January2022

.

200,100—200,100

Aditions

.

13,548—13,548

Asat31December2022and

1January2023

.

213,648—213,648

Aditions

.

—7,4277,427

Asat31December2023,1January2024

and31December2024and

1January2025and31March2025

.

213,6487,427221,075

Depreciation

Asat1January2022

.

37,182—37,182

Providedfortheyear

.

4,796—4,796

Asat31December2022and

1January2023

.

41,978—41,978

Providedfortheyear

.

4,343—4,343

Asat31December2023and

1January2024

.

46,321—46,321

Providedfortheyear

.

4,3433,7148,057

Asat31December2024and

1January2025

.

50,6643,71454,378

Providedfortheperiod

.

8869281,814

Asat31March2025

.

51,5504,64256,192

Caryingamounts

Asat31December2022

.

171,670—171,670

Asat31December2023

.

167,3277,427174,754

Asat31December2024

.

162,9843,713166,697

Asat31March2025

.

162,0982,785164,883

Fortheyearsended31December2022,2023and2024,andthethremonthsended31

March2025theGroupleasesvariousoficepremisesforitsoperations.Leasecontractsare

enteredintoforfixedtermof1.3yearsto3years.Leasetermsarenegotiatedonanindividual

basisandcontainawiderangeofdiferentermsandconditions.Indeterminingtheleasetermand

APENDIXIACOUNTANTS’REPORT

–I-72–

---

asesingthelengthofthenon-cancelableperiod,theGroupapliesthedefinitionofacontract

andeterminestheperiodforwhichthecontractisenforceable.ThelanduserightsoftheGroup

andtheCompanyarelocatedintheMainlandChinaofthePRContheleaseof50years.

Restrictionsorcovenantsonlease

LeaseliabilitiesofRMB3,948,000,RMB15,396,000,RMB3,961,000,andRMB3,078,000are

recognisedwithrelatedright-of-useasetsofRMB5,877,000,RMB18,181,000,RMB8,555,000,

andRMB6,076,000asat31December2022,31December2023,31December2024and31March

2025,respectively.Theleaseagrementsdonotimposeanycovenantsotherthanthesecurity

interestsintheleasedasetsthatareheldbythelesor.Leasedasetsmaynotbeusedasecurity

forborowingpurposes.

Leasescomited

Asat31December2022,31December2023,31December2024and31March2025,the

Groupdidnotenterintoanynewleasesforleasedbuildingsandmachineryandequipmenthat

havenotyetcomenced.

22.DEFEREDTAXATION

Group

ThefolowingisasumaryofthedeferedtaxbalancesoftheGroupforfinancialreporting

purposes:

Asat31December

Asat31

March

RMB’000RMB’000RMB’000RMB’000

Deferedtaxasets

.

56,95352,53665,74269,373

Deferedtaxliabilities

.

(13,314)(15,108)(5,809)(5,166)

43,63937,42859,93364,207

APENDIXIACOUNTANTS’REPORT

–I-73–

---

Thefolowingsarethemajordeferedtaxasetsandliabilitiesrecognisedandmovements

duringtheRelevantPeriods:

Impairment

alowance

Fairvalue

adjustmentsof

financialasets

Defered

income

Temporary

diferenceson

leases

Aceleratedtax

depreciation

Intergroup

unrealised

profitsTaxloses

Share-based

paymentsTotal

RMB’000RMB’000RMB’000RMB’000RMB’000RMB’000RMB’000RMB’000RMB’000

Atas1January2022

.

2,55717148,576(204)(7,781)—43,319

(Charged)/creditedto

profitorlos

.

1,148(5,141)3,682(454)1,085—320

Asat31December

2022and

1January2023

.

3,705(4,970)52,258(658)(6,696)—43,639

(Charged)/creditedto

profitorlos

.

3,8464,503(9,859)240(4,941)—(6,211)

Asat31December

2023and

1January2024

.

7,551(467)42,399(418)(11,637)—37,428

(Charged)/Creditedto

profitorlos

.

2,645753(9,017)(271)7,1124,31015,4811,49222,505

Asat31December

2024and

1January2025

.

10,19628633,382(689)(4,525)4,31015,4811,49259,933

(Charged)/Creditedto

profitorlos

.

63432(1,292)2402712,8816758334,274

Asat31March2025

.

10,83031832,090(449)(4,254)7,19116,1562,32564,207

Note:

Asat31December2022,31December2023,31December2024and31March2025,theGrouphadunusedtaxlosesof

RMB840,558,000,RMB930,975,000,RMB724,905,000andRMB729,586,000,respectively,availabletofsetagainst

futureprofits,andhadnotbenrecognisedasat31December2022,2023,2024and31March2025,respectively,dueto

theunpredictabilityofutureprofitstreams.

APENDIXIACOUNTANTS’REPORT

–I-74–

---

Company

ThefolowingisasumaryofthedeferedtaxbalancesoftheCompanyforfinancial

reportingpurposes:

Asat31December

Asat31

March

RMB’000RMB’000RMB’000RMB’000

Deferedtaxasets

.

32,68037,89145,97146,245

Deferedtaxliabilities

.

(11,845)(7,469)(5,083)(4,672)

20,83530,42240,88841,573

Thefolowingsarethemajordeferedtaxasetsandliabilitiesrecognisedandmovements

duringtheRelevantPeriods:

Impairment

alowance

Fairvalue

adjustments

ofinancial

asets

Defered

income

Temporary

diferenceson

leases

Acelerated

tax

depreciationTaxloses

Share-based

paymentsTotal

RMB’000RMB’000RMB’000RMB’000RMB’000RMB’000RMB’000RMB’000

Atas1January2022

.

2,20817126,017—(7,781)—20,615

(Charged)/creditedtoprofitorlos

.

1,220(5,141)3,056—1,085—220

Asat31December2022and

1January2023

.

3,428(4,970)29,073—(6,696)—20,835

(Charged)/creditedtoprofitorlos

.

3,6864,503313—1,085—9,587

Asat31December2023and

1January2024

.

7,114(467)29,386—(5,611)—30,422

(Charged)/Creditedtoprofitorlos

.

1,120753(3,176)(274)1,0859,9311,02710,466

Asat31December2024and

1January2025

.

8,23428626,210(274)(4,526)9,9311,02740,888

(Charged)/Creditedtoprofitorlos

.

93532(1,292)143271-596685

Asat31March2025

.

9,16931824,918(131)(4,255)9,9311,62341,573

APENDIXIACOUNTANTS’REPORT

–I-75–

---

23.FINANCIALASETSATFVTPL

Asat31December

Asat31

March

RMB’000RMB’000RMB’000RMB’000

GroupandCompany

Financialasets

Non-curentasets

FinancialasetsatFVTPL

—Unlistedequityinvestments

.

2,8052,1552,0931,877

Curentasets

FinancialasetsatFVTPL

—Wealthmanagementproduct

.

1,789,327274,959—

1,792,132277,1142,0931,877

24.OTHERNON-CURENTASETS

Asat31December

Asat31

March

RMB’000RMB’000RMB’000RMB’000

Group

Prepaymentforpurchases,acquisition

ofproperty,plantandequipment

.

18,416111,114112,651116,852

Company

Prepaymentforacquisitionof

property,plantandequipment

.

18,41620,3226,9027,202

APENDIXIACOUNTANTS’REPORT

–I-76–

---

25.TRADEANDOTHERECEIVABLESANDPREPAYMENTS

Asat31December

Asat31

March

RMB’000RMB’000RMB’000RMB’000

Group

Tradereceivables

—Thirdparties

.

130,402311,808528,327544,507

—Relatedparties(note(a)

.

14,86313,22719,39113,497

145,265325,035547,718558,004

Les:losalowancefortrade

receivables

.

(7,263)(16,252)(27,454)(28,012)

138,002308,783520,264529,992

Bilsreceivables

—Comercial

.

14,88755,82048,25220,682

—Bank

.

—8,005317869

14,88763,82548,56921,551

Les:losalowanceforbil

receivables

.

(744)(2,791)(2,413)(1,034)

14,14361,03446,15620,517

Othereceivables

—Thirdparties

.

25,46524,5879,3635,002

—Relatedparties(note(a)

.

—550550

25,46524,5879,9135,552

Les:losalowanceforother

receivables

.

(1,273)(1,229)(496)(278)

24,19223,3589,4175,274

Tradeandothereceivables

.

176,337393,175575,837555,783

Prepayment(note(c)

.

58,719143,54339,06296,824

235,056536,718614,899652,607

APENDIXIACOUNTANTS’REPORT

–I-77–

---

Asat31December

Asat31

March

RMB’000RMB’000RMB’000RMB’000

Company

Tradereceivables

—Thirdparties

.

128,887268,054479,127480,871

—Relatedparties(note(a)

.

14,86313,227—

—Subsidiaries(note(b)

.

—400,317495,92780,534

143,750681,598975,054561,405

Les:losalowancefortrade

receivables

.

(7,188)(14,064)(24,025)(24,156)

136,562667,534951,029537,249

Bilsreceivables

—Comercial

.

14,88755,82021,85416,085

—Bank

.

—8,0054,3172,676

14,88763,82526,17118,761

Les:losalowanceforbil

receivables

.

(744)(2,791)(1,093)(804)

14,14361,03425,07817,957

Othereceivables

—Thirdparties

.

3,2101,2972,6802,771

—Subsidiaries(note(b)

.

530,0552,117,8743,116,1532,892,309

533,2652,119,1713,118,8332,895,080

Les:losalowanceforother

receivables

.

(160)(71)(134)(139)

533,1052,119,1003,118,6992,894,941

Tradeandothereceivables

.

683,8102,847,6684,094,8063,450,147

Prepayment(note(c)

.

51,399148,5813,02713,145

735,2092,996,2494,097,8333,463,292

Notes:

(a)Detailsofthetradeandothereceivablesduefromrelatedpartiesaresetoutinote43.

(b)DuringtheRelevantPeriods,theamountsduefromsubsidiarieswereunsecured,interestfreandrepayableon

demand.

(c)Prepaymentsmainlyconsistofmoneypaidtosupliersofinventories.

APENDIXIACOUNTANTS’REPORT

–I-78–

---

TheGroupgeneralyalowsacreditperiodrangingfrom60to180daystoitscustomers.The

folowingisaginganalysisoftradereceivables(netofalowanceforimpairmentloses),presented

basedontheinvoicedates,athendofeachfinancialperioduringtheRelevantPeriods:

Asat31December

Asat31

March

RMB’000RMB’000RMB’000RMB’000

Group

Within90days

.

112,881263,825420,264376,186

91to180days

.

15,65838,36579,558107,121

181daysto1year

.

9,4636,59320,25046,370

Over1year

.

—192315

138,002308,783520,264529,992

MovementsinlifetimeECLthathavebenrecognisedfortradereceivablesinacordance

withthesimplifiedaproachsetoutinIFRS9fortheyearsended31December2022,2023,2024,

andthethremonthsended31March2025:

Asat31December

Asat31

March

RMB’000RMB’000RMB’000RMB’000

Athebeginingofyear/period

.

3,0417,26316,25227,454

Provided

.

4,2228,98911,278558

Exchangediference

.

—(76)—

Athendofyear/period

.

7,26316,25227,45428,012

APENDIXIACOUNTANTS’REPORT

–I-79–

---

TheCompanygeneralyalowsacreditperiodrangingfrom60to180daystoitscustomers.

Thefolowingisaginganalysisoftradereceivables(netofalowanceforimpairmentloses),

presentedbasedontheinvoicedates,athendofeachfinancialperioduringtheRelevant

Periods:

Asat31December

Asat31

March

RMB’000RMB’000RMB’000RMB’000

Company

Within90days

.

111,613514,761456,938380,182

91to180days

.

15,487143,547398,637109,834

181daysto1year

.

9,4629,22686,24646,918

Over1year

.

—9,208315

136,652667,534951,029537,249

MovementinlifetimeECLthathasbenrecognisedfortradereceivablesoftheCompanyin

acordancewiththesimplifiedaproachsetoutinIFRS9fortheyearsended31December2022,

2023and2024andthethremonthsended31March2025:

Asat31December

Asat31

March

RMB’000RMB’000RMB’000RMB’000

Athebeginingofyear/period

.

3,0187,18814,06424,025

Provided

.

4,1706,8769,961131

Athendofyear/period

.

7,18814,06424,02524,156

APENDIXIACOUNTANTS’REPORT

–I-80–

---

26.CASHANDBANKBALANCES/RESTRICTEDBANKANDOTHERDEPOSITS

Asat31December

Asat31

March

RMB’000RMB’000RMB’000RMB’000

Group

Cashandbankbalances(note(a)

.

682,492811,5931,155,4561,402,064

Restrictedbankandotherdeposits

.

Portionclasifiedascurentasets

(note(b)

.

2,356218,15583,74272,702

684,8481,029,7481,239,1981,474,766

Asat31December

Asat31

March

RMB’000RMB’000RMB’000RMB’000

Company

Cashandbankbalances(note(a)

.

637,714603,911783,3471,014,076

Restrictedbankandotherdeposits

.

Portionclasifiedascurentasets

(note(b)

.

2,356207,07867,61958,029

640,070810,989850,9661,072,105

Notes:

(a)Athendofeachreportingperiod,cashandbankbalancesoftheGroupcomprisedofbankbalancesandcash

held.Bankbalancescariedinterestatprevailingmarketrateswhichare0.25%,0.2%,0.1%and0.1%peranum

asat31December2022,2023,2024and31March2025,respectively.

(b)Asat31December2023,2024and31March2025,certainbankdepositswithbalancesofaproximately

RMB200,103,000,RMB64,317,000andRMB64,976,000werepledgedtosecurebilspayablesof

RMB366,636,000,RMB153,728,000andRMB236,879,000,respectively.

Asat31December2023,2024and31March2025,aproximatelyRMB2,080,000,RMB3,801,000,RMB3,801,000,

respectively,wasrestrictedandheldatabankinthePRCasareserveunderlitigation.

APENDIXIACOUNTANTS’REPORT

–I-81–

---

27.INVENTORIES

Asat31December

Asat31

March

RMB’000RMB’000RMB’000RMB’000

Group

Rawmaterials

.

296,892404,468497,886490,549

Workinprogres

.

153,470204,709213,339249,027

Finishedgods

.

97,675264,601348,994336,878

Les:write-downsofinventories

.

(14,758)(30,501)(38,343)(43,602)

Total

.

533,279843,2771,021,8761,032,852

Asat31December

Asat31

March

RMB’000RMB’000RMB’000RMB’000

Company

Rawmaterials

.

279,780255,368167,832171,284

Workinprogres

.

153,47071,62699,73998,299

Finishedgods

.

97,675121,679168,528141,755

Les:write-downsofinventories

.

(14,758)(30,501)(29,641)(36,030)

Total

.

516,167418,172406,458375,308

28.OTHERCURENTASETS

Asat31December

Asat31

March

RMB’000RMB’000RMB’000RMB’000

Group

PrepaidVAT

.

71,544114,239231,824160,230

Prepaidothertaxes

.

—4,9269,10712,094

PrepaidEIT

.

—2,7494,223

Others

.

12—5,00013,311

Total

.

71,556119,165248,680189,858

APENDIXIACOUNTANTS’REPORT

–I-82–

---

Asat31December

Asat31

March

RMB’000RMB’000RMB’000RMB’000

Company

PrepaidVAT

.

8,3338,47445,17146,473

Prepaidothertaxes

.

—4,9268,33911,937

Others

.

—5,00013,311

Total

.

8,33313,40058,51071,721

29.TRADEANDOTHERPAYABLES

Asat31December

Asat31

March

RMB’000RMB’000RMB’000RMB’000

Group

Tradepayables

—Thirdparties

.

185,308702,943616,865504,240

—Relatedparties(note(a)

.

—492174159

185,308703,435617,039504,399

Bilspayable(note(c)

.

—366,636153,728236,879

Otherpayables

—Thirdparties

.

20,80726,06222,35718,316

—Relatedparties

.

11583125—

—Salaryandbonuspayables

.

21,93447,57643,39449,174

—Othertaxespayable

.

3,7124,6356,0054,108

46,56878,35671,88171,598

Totaltradeandotherpayables

.

231,8761,148,427842,648812,876

APENDIXIACOUNTANTS’REPORT

–I-83–

---

Asat31December

Asat31

March

RMB’000RMB’000RMB’000RMB’000

Company

Tradepayables

—Thirdparties

.

98,09582,178105,20685,061

—Relatedparties(note(a)

.

—492174—

—Subsidiaries(note(b)

.

842314,601787,588622,251

98,937397,271892,968707,312

Bilspayable

—Thirdparties

.

—20,394153,728228,300

—Subsidiaries(note(b)

.

—361,5916,359—

—381,985160,087228,300

Otherpayables

—Thirdparties

.

6,46120,08116,33915,397

—Relatedparties(note(a)

.

11583—

—Salaryandbonuspayables

.

12,42125,99920,89527,980

—Othertaxespayable

.

2,7992,1042,2912,054

21,79648,26739,52545,431

Totaltradeandotherpayables

.

120,733827,5231,092,580981,043

Notes:

(a)DetailsofthetradeandotherpayablesduetorelatedpartiesaresetoutinNote43.

(b)DuringtheRelevantPeriods,theamountsduetosubsidiarieswereunsecured,repayableondemandandinterest

fre.

(c)Asat31December2023and2024and31March2025,theGroup’sbilpayablesofaproximately

RMB366,636,000,RMB153,728,000andRMB236,879,000weresecuredbycertainoftheGroup’sdepositsof

aproximatelyRMB200,103,000,RMB64,317,000andRMB64,976,000respectively.

APENDIXIACOUNTANTS’REPORT

–I-84–

---

Paymentermswithsupliersaremainlyoncreditrangingfrom30to90daysfrominvoice

date.Thefolowingisanaginganalysisoftradepayablespresentedbasedontransactiondateat

thendofeachofthereportingperiod:

Asat31December

Asat31

March

RMB’000RMB’000RMB’000RMB’000

Group

Within90days

.

160,752484,680268,777198,800

91daysto180days

.

16,101185,10027,12664,668

181daysto1year

.

1,86710,91289,67019,698

Over1year

.

6,58822,743231,466221,233

185,308703,435617,039504,399

Asat31December

Asat31

March

RMB’000RMB’000RMB’000RMB’000

Company

Within90days

.

74,704363,017399,689374,663

91daysto180days

.

16,0423,533270,855271,778

181daysto1year

.

1,8678,549208,29118,413

Over1year

.

6,32422,17214,13342,458

98,937397,271892,968707,312

APENDIXIACOUNTANTS’REPORT

–I-85–

---

30.CONTRACTLIABILITIES

Asat31December

Asat31

March

RMB’000RMB’000RMB’000RMB’000

Group

Curentportion

—Thirdparties

.

22,36099,31845,15040,248

Non-curentportion

—Thirdparties

.

—44,10444,104

Total

.

22,36099,31889,25484,352

Asat31December

Asat31

March

RMB’000RMB’000RMB’000RMB’000

Company

Curentportion

—Thirdparties

.

22,36099,31844,83940,233

—Subsidiaries

.

—12,218

22,36099,31844,83952,451

Non-curentportion

—Thirdparties

.

—44,10444,104

Total

.

22,36099,31888,94396,555

WhentheGroupreceivesdepositsfromcustomersforthesalesofgods,thiswilgiveriseto

contractliabilitiesathestartofacontract,untiltherevenuerecognisedontherelevantcontract

excedstheamountofthedeposits.ChangesincontractliabilitiesprimarilyrelatetotheGroup’s

andtheCompany’sperformanceofservicesunderthecontracts.RevenueofRMB2,495,000,

RMB22,360,000,RMB14,346,000,andRMB5,178,000oftheGroupwererecognisedfortheyears

ended31December2022,2023,2024,andthethremonthsended31March2025thatwere

includedinthecontractliabilitiesathebeginingoftherelevantyears/periods,respectively.

RevenueofRMB2,495,000,RMB22,360,000,RMB14,346,000,andRMB4,868,000ofthe

Companywererecognisedfortheyearsended31December2022,2023,2024,andthethre

monthsended31March2025thatwereincludedinthecontractliabilitiesathebeginingofthe

relevantyears/periods,respectively.

APENDIXIACOUNTANTS’REPORT

–I-86–

---

31.BOROWINGS

Asat31December

Asat31

March

RMB’000RMB’000RMB’000RMB’000

Group

Curentportion

Bankborowings,unsecured(note

(b)

.

—609,263655,742

Discountedbils(note(a)

.

—3,150—

—3,150609,263655,742

Non-curentportion

Bankborowings,unsecured(note

(b)

.

—85,737265,000

Totalborowings

.

—3,150695,000920,742

Loaninterestatrateperanuminthe

rangeof

.

N/A0.85%2.70%−3.10%1.40%−3.10%

Totalcurentandnon-curentborowingswerescheduledtorepayasfolows:

Asat31December

Asat31

March

RMB’000RMB’000RMB’000RMB’000

Ondemandorwithinoneyear

.

—3,150609,263655,742

Morethanoneyear,butnotexceding

twoyears

.

—85,737105,000

Morethantwoyears,butnot

excedingfiveyears

.

—160,000

—3,150695,000920,742

APENDIXIACOUNTANTS’REPORT

–I-87–

---

Asat31December

Asat31

March

RMB’000RMB’000RMB’000RMB’000

Company

Curentportion

Bankborowings,unsecured(note

(c)

.

—559,263586,558

Non-curentportion

Bankborowings,unsecured(note

(c)

.

—85,737265,000

Totalborowings

.

—645,000851,558

Loaninterestatrateperanuminthe

rangeof

.

N/AN/A2.70%−3.10%1.40%−3.10%

Totalcurentandnon-curentborowingswerescheduledtorepayasfolows:

Asat31December

Asat31

March

RMB’000RMB’000RMB’000RMB’000

Ondemandorwithinoneyear

.

—559,263586,558

Morethanoneyear,butnotexceding

twoyears

.

—85,737105,000

Morethantwoyears,butnot

excedingfiveyears

.

—160,000

—645,000851,558

ThecaryingamountsoftheGroup’sandtheCompany’scurentinterest-bearingbank

borowingaproximatetotheirfairvalues.

Notes:

(a)Asat31December2023,otherborowingrepresentedloansarisingfromdiscountedbils.Theborowingis

guarantedbytheCompany,interestbearingatafixedinterestrateat0.85%peranumandrepayablewithina

year.

APENDIXIACOUNTANTS’REPORT

–I-88–

---

(b)At31December2022,2023and2024and31March2025,theGrouphadbankingfacilitiestothextentof

aproximatelynil,RMB1,000,000,000,RMB2,430,000,000,andRMB2,430,000,000respectively.Theaforesaid

bankloansoutstandingasat31December2022,2023,2024and31March2025wereaproximatelynil,nil,

RMB695,000,000andRMB920,742,000respectively.

(c)At31December2022,2023,2024and31March2025,theCompanyhadbankingfacilitiestothextentof

aproximatelynil,RMB700,000,000,RMB1,930,000,000andRMB1,730,000,000respectively.Theaforesaidbank

loansoutstandingasat31December2022,2023,2024and31March2025wereaproximatelynil,nil,

RMB645,000,000andRMB851,558,000respectively.

(d)At31December2022,2023,2024and31March2025,theCompanyhadisuedguarantestobankstosecured

bankingfacilitiesgrantedtocertainsubsidiariestothextentofaproximatelynil,RMB300,000,000,

RMB300,000,000andRMB100,000,000respectively.Theaforesaidbankloansoutstandingasat31December

2022,2023,2024and31March2025wereaproximatelynil,nil,RMB50,000,000andnilrespectively.

32.LEASELIABILITIES

ThefolowingtableshowstheremainingcontractualmaturitiesoftheGroup’sandthe

Company’sleaseliabilitiesathendofeachreportingperiod:

Asat31December

Asat31

March

RMB’000RMB’000RMB’000RMB’000

Group

Withinoneyear

.

704453,9613,078

Withinaperiodofmorethanoneyear

butwithintwoyears

.

3,24415,111—

Withinaperiodofmorethantwo

yearsbutwithinfiveyears

.

—240—

3,94815,3963,9613,078

Les:Amountsdueforsetlement

within12monthshown

undercurentliabilities

.

704453,9613,078

Amountdueforsetlementafter12

monthshownundernon-curent

liabilities

.

3,24415,351—

APENDIXIACOUNTANTS’REPORT

–I-89–

---

Asat31December

Asat31

March

RMB’000RMB’000RMB’000RMB’000

Company

Withinoneyear

.

—1,8851,907

Withinaperiodofmorethanoneyear

butwithintwoyears

.

—7,427—

—7,4271,8851,907

Les:Amountsdueforsetlement

within12monthshown

undercurentliabilities

.

—1,8851,907

Amountdueforsetlementafter12

monthshownundernon-curent

liabilities

.

—7,427—

33.DEFEREDINCOME

Group

Deferedincome

relatedtoasets

Deferedincome

relatedtoincomeTotal

RMB’000RMB’000RMB’000

Asat1January2022

.

225,13338,550263,683

Aditions

.

5,62039,77745,397

Releasetoprofitandlos

.

(18,575)(3,945)(22,520)

Asat31December2022

.

212,17874,382286,560

Aditions

.

81,09838,115119,213

Releasetoprofitandlos

.

(26,228)(13,800)(40,028)

Asat31December2023

.

267,04898,697365,745

Aditions

.

35,50014,79050,290

Releasetoprofitandlos

.

(29,926)(20,736)(50,662)

Asat31December2024

.

272,62292,751365,373

Aditions

.

—100100

Releasetoprofitandlos

.

(7,926)(5,000)(12,926)

Asat31March2025

.

264,69687,851352,547

APENDIXIACOUNTANTS’REPORT

–I-90–

---

Company

Deferedincome

relatedtoasets

Deferedincome

relatedtoincomeTotal

RMB’000RMB’000RMB’000

Asat1January2022

.

134,89838,550173,448

Aditions

.

3,12039,77742,897

Releasetoprofitandlos

.

(18,575)(3,945)(22,520)

Asat31December2022

.

119,44374,382193,825

Aditions

.

9,92126,20536,126

Releasetoprofitandlos

.

(20,241)(13,800)(34,041)

Asat31December2023

.

109,12386,787195,910

Aditions

.

3,00011,34714,347

Releasetoprofitandlos

.

(15,825)(19,700)(35,525)

Asat31December2024

.

96,29878,434174,732

Aditions

.

—100100

Releasetoprofitandlos

.

(3,715)(5,000)(8,715)

Asat31March2025

.

92,58373,534166,117

Note:Itmainlycompriseincentivesprovidedbylocalauthorities.Theamountsreceivedaretreatedasdeferedincome

andwilbereleasedtoprofitorlosoverthestimatedusefulivesoftheunderlyingproperty,plantand

equipmentorovertheperiod.Thereisnounfulfiledobligationfortherecognizedincomeathendofreporting

dateforeachoftheRelevantPeriods.

APENDIXIACOUNTANTS’REPORT

–I-91–

---

34.SHARECAPITAL

Numberof

ordinarysharesAuthorisedshares

Isuedandpaid

shares

RMB’000RMB’000

GroupandCompany

OrdinarysharesofRMB1.00each

Asat1January2022

.

386,739,939386,740386,740

IsueofnewsharesuponA-shareIPO

(note(a)

.

42,971,10542,97142,971

Asat31December2022,1January2023,

31December2023,1January2024,

31December2024,1January2025,and

31March2025

.

429,711,044429,711429,711

Note:

(a)Duringtheyearended31December2022,theCompanyisuednewsharesof42,971,105sharesuponA-shareIPO.

On12January2022,theCompany’shareswerelistedontheSci-TechinovationboardoftheShanghaiStock

Exchangewithstockcode688234.

35.TREASURYSHARES

GroupandCompany

Asat31DecemberAsat31March

Numberof

sharesRMB’000

Numberof

sharesRMB’000

Numberof

sharesRMB’000

Numberof

sharesRMB’000

Balancebroughtforward

.

—2,005,884100,243

Repurchaseofshares(note)

.

—2,005,884100,243—

Balancecariedforward

.

—2,005,884100,2432,005,884100,243

Note:Duringtheyearended31December2024,theCompanyhasrepurchased2,005,884sharesofA-shares,acounting

for0.47%oftheCompany’stotalshares.Theimplementationoftherepurchasemetstherequirementsofthe

Company’sharerepurchaseplanandrelevantlawsandregulations

APENDIXIACOUNTANTS’REPORT

–I-92–

---

36.RESERVES

ReservemovementoftheCompany:

Capitalreserve

Surplus

reserve

Retained

earnings/

(acumulated

loses)Total

RMB’000RMB’000RMB’000RMB’000

Asat1January2022

.

1,755,3178,34375,0871,838,747

Losfortheyear

.

—(139,406)(139,406)

Capitalcontributionbyshareholders

oftheCompany

.

3,160,703—3,160,703

Others

.

4,000—4,000

Asat31December2022and

1January2023

.

4,920,0208,343(64,319)4,864,044

Losfortheyear

.

—(358)(358)

Others(notei)

.

23,491—23,491

Asat31December2023and

1January2024

.

4,943,5118,343(64,677)4,887,177

Profitfortheyear

.

—108,854108,854

Transferedtosurplusreserve

.

—4,418(4,418)—

Recognitionofshare-basedpayments

(note40)

.

10,209—10,209

Asat31December2024and1

January2025

.

4,953,72012,76139,7595,006,240

Profitfortheperiod

.

—490490

Recognitionofshare-basedpayments

(note40)

.

5,194—5,194

Asat31March2025

.

4,958,91412,76140,2495,011,924

Notes:

(i)Theamountrepresentshareofpost-acquisitionsharepremiumofanasociate.

DescriptionoftheGroup’sreservesasbelow:

(a)CapitalReserve:

Theamountmainlyrepresentscapitalcontributioninexcesofnominalvalueofsharecapital.

APENDIXIACOUNTANTS’REPORT

–I-93–

---

(b)Surplusreserve:

InacordancewiththearticlesofasociationofsubsidiariesestablishedinthePRC,thesesubsidiariesarerequired

totransfer10%oftheprofitaftertaxationinacordancetoChinaAcountingStandardsforBusinesEnterprisestothe

statutoryreserveuntilthereservereaches50%oftheregisteredcapital.Transfertothisreserveshalbemadebefore

distributingdividendstoequityholders.Thestatutoryreservecanbeusedtomakeupforpreviousyears’loses,expand

thexistingoperationsorconvertintoaditionalcapitalofthesubsidiaries.

(c)Exchangereserve:

Theamountrepresentsgains/losesarisingonretranslatingthenetasetsoforeignoperationsintopresentation

curencyoftheGroup.

(d)(Acumulatedlos)/retainedearnings:

Cumulativenetgainsandlosesrecognisedinprofitorlos.

37.OVERVIEWOFTHEGROUP’SEXPOSURETOCREDITRISK

Creditriskreferstotheriskthatacounterpartywildefaultonitscontractualobligations

resultinginfinancialostotheGroup.Athendofeachreportingperiod,theGroup’smaximum

exposuretocreditriskwhichcauseafinancialostotheGroupduetofailuretodischargean

obligationbythecounterpartiesisarisingfromthecaryingamountoftherespectiverecognised

financialasetsastatedintheconsolidatedstatementsofthefinancialposition.

Inordertominimisecreditrisk,theGrouphastaskeditsfinanceteamtodevelopand

maintaintheGroup’screditriskgradingtocategorisexposuresacordingtotheirdegreofrisk

ofdefault.ManagementusespubliclyavailablefinancialinformationandtheGroup’sown

historicalrepaymentrecordstorateitsmajorcustomersandotherdebtors.TheGroup’sexposure

andthecreditratingsofitscounterpartiesarecontinuouslymonitoredandtheagregatexposure

ispreadamongstaprovedcounterparties.

TheGroup’screditriskisprimarilyatributabletotradeandothereceivables.Management

hasacreditpolicyinplaceandthexposurestothesecreditrisksaremonitoredonanongoing

basis.

Tradereceivables

Fortradereceivables,theGrouphasapliedthesimplifiedaproachinIFRS9tomeasure

thelosalowanceatlifetimeECL.Exceptfortradereceivablesthatarecredit-impaired,theGroup

determinestheECLontheseitemscolectivelybasedonlospaternsasreflectedinthedebtors’

historicalpaymentpatern.TheGroupdeterminestheECLontheseitemsbyusingaprovision

matrixasat31December2022,2023,2024and31March2025withinlifetimeECL(notcredit

impaired)estimatedbasedonthefinancialqualityofdebtorsandhistoricalcreditlosexperience,

APENDIXIACOUNTANTS’REPORT

–I-94–

---

adjustedasapropriatetoreflectcurentconditionsandestimatesofutureconomiconditions

withreferencetogeneralmacroeconomiconditionsthatmayafectheabilityofdebtorstosetle

receivables.TomeasuretheECL,thetradereceivableshavebengroupedintothecategories

basedonsharecreditriskcharacteristicsandtheagingasdisclosedinote25.

BilsandOthereceivables

Forbilsandothereceivables,managementoftheGroupmakesperiodicasesmentonthe

recoverabilitybasedonhistoricalsetlementrecords,pastexperience,andalsoquantitativeand

qualitativeinformationthatisreasonableandsuportiveforward-lokinginformation.TheGroup

measuresthelosalowancequalto12mECL,unleswhenthereareindicatorsthathefinancial

asetiscredit-impaired,theGrouprecogniseslifetimeECL.TheGrouprecogniseslifetimeECL

forbilsandothereceivableswhenthereisevidenceindicating(i)therehasbensignificant

increaseincreditrisksinceinitialrecognition;(i)theasetiscredit-impairedbutheGrouphas

realisticprospectofrecovery;or(i)thedebtorisinseverefinancialdificulty.

CategoriesDescription

Othereceivables,otherthan

creditimpaired

.

ManagementoftheGroupmakesperiodicasesmentonthe

recoverabilitybasedonhistoricalsetlementrecords,past

experience,andalsoquantitativeandqualitativeinformation

thatisreasonableandsuportiveforward-lokinginformation.

Bilsreceivables,otherthan

creditimpaired

.

ManagementoftheGroupmakesperiodicasesmentonthe

recoverabilitybasedonhistoricalsetlementrecords,past

experience,andalsoquantitativeandqualitativeinformation

thatisreasonableandsuportiveforward-lokinginformation.

Creditimpaired

.

Thereisevidenceindicatingthathedebtorisinsevere

financialdificultyandtheGrouphasnorealisticprospectof

recovery.

Cashandbankbalances,restrictedbankdepositsandbilsreceivablesfrombank

Forthepurposesofimpairmentasesment,cashandbankbalances,restrictedbankdeposits

andbilsreceivablesfrombankthataresubjectoimpairmentareconsideredtohavelowcredit

riskasthecounterpartiestotheseitemshavenohistoricaldefaultrecord.Acordingly,forthe

purposeofimpairmentasesmentfortheseitemsasets,thelosalowanceismeasuredatan

amountequalto12mECL.IndeterminingtheECLforcashandbankbalancesandrestrictedbank

depositsthataresubjectoimpairment,thedirectorsoftheCompanyhavetakenintoacounthe

historicaldefaultexperienceandthefutureprospectsoftheindustriesand/orconsideringvarious

APENDIXIACOUNTANTS’REPORT

–I-95–

---

externalsourcesofactualandforecasteconomicinformation,asapropriate,inestimatingthe

probabilityofdefaultofeachofthefinancialasetsthataresubjectoimpairmentocuring

withintheirespectivelosasesmentimehorizon,aswelasthelosupondefaultineachcase.

ThedirectorsoftheCompanyconsideredthatheECLalowanceisinsignificantat31December

2022,2023and2024and31March2025.

ThefolowingtabledetailsthecreditriskexposuresoftheGroup’stradereceivableswhich

aresubjectoECLasesment:

Averagexpected

creditlosrateGrosamountsLosalowance

RMB’000RMB’000

Asat31December2022

Within90days

.

5%118,8225,941

91to180days

.

5%16,482824

181daysto1year

.

5%9,961498

145,2657,263

Asat31December2023

Within90days

.

5%277,71013,885

91to180days

.

5%40,3842,019

181daysto1year

.

5%6,941348

325,03516,252

Asat31December2024

Within90days

.

5%442,38322,119

91to180days

.

5%83,7454,187

181daysto1year

.

5%21,3161,066

Over1year

.

30%27482

547,71827,454

Asat31March2025

Within90days

.

5%395,98519,799

91to180days

.

5%112,7595,638

181daysto1year

.

5%48,8102,440

Over1year

.

30%450135

558,00428,012

APENDIXIACOUNTANTS’REPORT

–I-96–

---

Inviewofthecreditriskofthedebtors,historicalpaymentpaternandforwardloking

information,theGroupconsidersthexpectedcreditriskforeceivablesagedwithin1yearis5%.

Andthereisnosignificantchangeincreditriskratingofthedebtors,historicalpaymentpatern

andforwardlokinginformationduringtheRelevantPeriods.

ThetablebelowdetailsthecreditriskexposuresoftheGroup’sbilsreceivables—

comercialwhicharesubjectoECLasesment:

Averagexpected

creditlosrateGrosamountsLosalowance

RMB’000RMB’000

Asat31December2022

Notcredit-impaired

.

5.00%14,887744

Asat31December2023

Notcredit-impaired

.

5.00%55,8202,791

Asat31December2024

Notcredit-impaired

.

5.00%48,2522,413

Asat31March2025

Notcredit-impaired

.

5.00%20,6821,034

ThetablebelowdetailsthecreditriskexposuresoftheGroup’sothereceivableswhichare

subjectoECLasesment:

Averagexpected

creditlosrateGrosamountsLosalowance

RMB’000RMB’000

Asat31December2022

Notcredit-impaired

.

5.00%25,4651,273

Asat31December2023

Notcredit-impaired

.

5.00%24,5871,229

Asat31December2024

Notcredit-impaired

.

5.00%9,913496

Asat31March2025

Notcredit-impaired

.

5.00%5,552278

APENDIXIACOUNTANTS’REPORT

–I-97–

---

TheGroupmakesfulprovisionforatradereceivablewhenthereisinformationindicating

thathedebtorisinseverefinancialdificultyandthereisnorealisticprospectofrecovery.

38.CAPITALMANAGEMENT

TheGroupmanagesitscapitaltoensurethatentitiescomprisingtheGroupwilbeableto

continueasgoingconcernwhilemaximisingthereturntoshareholdersthroughtheoptimisationof

thedebtandequitybalance.TheGroup’soveralstrategyremainsunchangedthroughouthe

RelevantPeriods.

ThecapitalstructureoftheGroupconsistsofleaseliabilities,borowings(netofcashand

bankbalances)andequityatributabletownersoftheCompany(comprisingcapitaland

reserves).

ManagementoftheGroupregularlyreviewsthecapitalstructureonacontinuousbasistaking

intoacounthecostofcapitalandtherisksasociatedwitheachclasofcapital.TheGroupwil

balanceitsoveralcapitalstructurethroughthepaymentofdividends,newshareisuesaswelas

theisueofnewdebts.

39.FINANCIALINSTRUMENTS

Categoriesofinancialinstruments

Asat31December

Asat31

March

RMB’000RMB’000RMB’000RMB’000

Group

Financialasets

Financialasetsmeasured

atamortisedcost

.

861,1851,422,9231,815,0352,030,549

FinancialasetsmeasuredatFVTPL

.

1,792,132277,1142,0931,877

2,653,3171,700,0371,817,1282,032,426

Financialiabilities

Financialiabilitiesatamortisedcost

.

240,8941,182,8481,537,7441,736,022

APENDIXIACOUNTANTS’REPORT

–I-98–

---

Asat31December

Asat31

March

RMB’000RMB’000RMB’000RMB’000

Company

Financialasets

Financialasetsmeasured

atamortisedcost

.

1,323,8803,658,6574,945,7724,522,252

FinancialasetsmeasuredatFVTPL

.

1,792,132277,1142,0931,877

3,116,0123,935,7714,947,8654,524,129

Financialiabilities

Financialiabilitiesatamortisedcost

.

126,717840,4631,740,2071,836,573

Financialriskmanagementobjectivesandpolicies

TheGroup’smajorfinancialasetsandliabilitiesincluderestrictedbankdeposits,trade,bils

andothereceivables,cashandbankbalances,wealthmanagementproducts,unlistedequity

investments,trade,bilsandotherpayables,borowingsandleaseliabilities.Detailsofthese

financialinstrumentsaredisclosedintherespectivenotes.Therisksasociatedwiththesefinancial

instrumentsandthepoliciesonhowtomitigatetheserisksaresetoutbelow.Managementofthe

Groupmanagesandmonitorsthesexposurestoensureapropriatemeasuresareimplementedon

atimelyandefectivemaner.

Marketrisk

TheGroup’sactivitiesexposeitprimarilytocurencyrisk,interestrateriskandpricerisk.

TherehasbenochangeintheGroup’sexposuretotheserisksorthemanerinwhichit

managedandmeasuredtherisksduringeachofthereportingyear.

APENDIXIACOUNTANTS’REPORT

–I-99–

---

Curencyrisk

SeveralsubsidiariesoftheCompanyhaveforeigncurencysales,capitalexpenditureand

cashandbankbalances,whichexposetheGrouptoforeigncurencyrisk.

ThesubsidiariesaremainlyexposedtoforeigncurencyofUS$,Japaneseyen(“JPY”),Euro

dolar(“EUR”),andHongKongdolar(“HK$”).

TheGroupcurentlydoesnothaveaforeigncurencyhedgingpolicy.However,the

managementmonitorsforeignexchangexposureandwilconsiderhedgingsignificantforeign

curencyexposureshouldthenedarise.ThecaryingamountsoftheGroup’sforeigncurency

denominatedmonetaryasets(tradeandothereceivablesandcashandbankbalances)and

liabilities(tradeandotherpayables)athendofeachreportingperiodaresumarisedasfolows:

Asat31December

Asat31

March

RMB’000RMB’000RMB’000RMB’000

Group

Asets

JPY

.

26,30634,49453,98652,204

US$

.

21,076152,492377,874315,373

EUR

.

—91—

Liabilities

JPY

.

7,1262362,2751,855

US$

.

—9,8755,5941,772

EUR

.

3,5412,3034,0654,249

HK$

.

—831

APENDIXIACOUNTANTS’REPORT

–I-100–

---

Sensitivityanalysis

ThefolowingtabledetailstheGroup’sensitivitytoa5%increaseandecreaseinRMB

againstforeigncurencies,theforeigncurencieswithwhichtheGroupmayhaveamaterial

exposure.5%representsmanagement’sasesmentofthereasonablyposiblechangeinforeign

exchangerate.Thesensitivityanalysisusesoutstandingforeigncurencydenominatedmonetary

itemsasabaseandadjuststheirtranslationathendofeachreportingperiodfora5%changein

foreigncurencyrate.Apositivenumberbelowindicatesanincreaseinprofitbeforetaxwhere

foreigncurenciestrengthens5%againstRMB.Fora5%weakeningoforeigncurenciesagainst

RMB,therewouldbeanequalandopositeimpacton(los)/profitbeforetax.

Asat31December

Asat31

March

RMB’000RMB’000RMB’000RMB’000

Group

Impacton(los)/profitbeforetax

JPY

.

9591,7132,5862,517

US$

.

1,0547,13118,61415,680

EUR

.

(177)(111)(203)(212)

HK$

.

—(42)

IntheopinionofthedirectorsoftheCompany,thesensitivityanalysisisunrepresentativeof

theinherentforeignexchangeriskastheyear/periodendexposuredoesnotreflecthexposure

duringtheyear/period.

Interestraterisk

TheGroupisexposedtofairvalueinterestrateriskinrelationtoitsrestrictedbankdeposits,

cashandbankbalances,leaseliabilitiesandborowings.Borowingagrementsincludeamixof

fixedandvariablerateloans,thexposureinrelationtofixedandvariablerateagrementsis

consideredtobeminimal.

Pricerisk

TheGroupisexposedtoequitypriceriskthroughitsfinancialinvestmentsatFVTPL(se

Note23).

Nosensitivityanalysishavebenpresentedasthefectisinsignificant.

APENDIXIACOUNTANTS’REPORT

–I-101–

---

Creditrisk

Asathendofeachreportingperiod,theGroup’smaximumexposuretocreditriskwhich

wilcauseafinancialostotheGroupduetofailuretodischargeanobligationbythe

counterpartiesisthecaryingamountoftherespectiverecognisedfinancialasetsastatedinthe

consolidatedstatementsofinancialposition.

Creditermsaregrantedtocustomerswhoareingodcreditreputation.Inordertominimise

thecreditrisk,managementhasdesignatedateamresponsiblefordeterminationofcreditlimits,

creditaprovalsandothermonitoringprocedurestoensurethatfolow-upactionsaretakento

recoveroverduedebts.Inadition,thedirectorsoftheCompanyreviewtherecoverabilityofeach

significantradedebtathendofeachreportingperiodtoensurethatadequateimpairmentloses

aremadeforirecoverableamounts.Inthisregard,thedirectorsoftheCompanyconsiderthathe

Group’screditriskisignificantlyreduced.

Asat31December2022,2023,2024and31March2025,theGrouphasconcentrationof

creditriskas17%,21%,41%and24%,respectively,ofthetotaltradereceivableswasduefrom

theGroup’slargestcustomer.TheGroup’sconcentrationofcreditriskonthetopfivelargest

customersacountedfor64%,58%,70%and58%ofthetotaltradereceivablesasat31December

2022,2023and2024and31March2025,respectively.

TheGroupexpectsthathereisnosignificantcreditriskasociatedwithcashdepositsince

theyaresubstantialydepositedatstate-ownedbanksandothermediumorlarge-sizedlistedbanks.

Managementdoesnotexpecthatherewilbeanysignificantlosesfromnon-performanceby

thesecounterparties.

TheGroupalsoexpectsthathereisnosignificantcreditriskasociatedwithamountsdue

fromrelatedpartiesincecounterpartiesaremainlyrelatedpartieswithgodreputation.

APENDIXIACOUNTANTS’REPORT

–I-102–

---

Liquidityrisk

Inthemanagementoftheliquidityrisk,theGroupandtheCompanymonitorandmaintaina

levelofcashandbankbalancesandunusedbankingfacilitiesdemedadequatebymanagemento

financetheGroup’soperationsandmitigatethefectsofluctuationsincashflows.

ThefolowingtabledetailstheGroup’sandtheCompany’sremainingcontractualmaturityfor

itsnon-derivativefinancialiabilitiesbasedontheagredrepaymenterms.Thetablehasben

drawnupbasedontheundiscountedcashflowsofinancialiabilitiesbasedonthearliestdateon

whichtheGroupandtheCompanycanberequiredtopay.Thetableincludesbothinterestand

principalcashflows.Tothextenthatinterestflowsarefloatingrate,theundiscountedamountis

derivedfrominterestrateathendofthereportingperiod.

Liquidityandinterestrisktable

Efective

interestrate

Ondemandor

lesthanone

year

Oneto

twoyears

Twoto

fiveyears

Total

undiscounted

cashflows

Carying

amount

RMB’000RMB’000RMB’000RMB’000RMB’000

Group

Asat31December2022

Tradeandotherpayables

.

N/A236,947—236,947236,947

Leaseliabilities

.

3.70%7043,311—4,0153,948

Total

.

237,6513,311—240,962240,895

Asat31December2023

Tradeandotherpayables

.

N/A1,151,409—1,151,4091,151,409

Borowings

.

0.85%3,153—3,1533,150

Leaseliabilities

.

3.65%4515,928—15,97315,396

Total

.

1,154,60715,928—1,170,5351,169,955

Asat31December2024

Tradeandotherpayables

.

N/A838,783—838,783838,783

Borowings

.

2.70%−

3.10%

622,06586,541—708,606695,000

Leaseliabilities

.

3.45%4,013—4,0133,961

Total

.

1,464,86186,541—1,551,4021,537,744

Asat31March2025

Tradeandotherpayables

.

N/A808,113—808,113808,113

Borowings

.

1.40%−

3.10%

672,543110,178164,413947,134920,742

Leaseliabilities

.

3.45%3,091—3,0913,078

Total

.

1,483,747110,178164,4131,758,3381,731,933

APENDIXIACOUNTANTS’REPORT

–I-103–

---

Efective

interestrate

Ondemandor

lesthanone

year

Oneto

twoyears

Twoto

fiveyears

Total

undiscounted

cashflows

Carying

amount

RMB’000RMB’000RMB’000RMB’000RMB’000

Company

Asat31December2022

Tradeandotherpayables

.

N/A126,717—126,717126,717

Total

.

126,717—126,717126,717

Asat31December2023

Tradeandotherpayables

.

N/A833,036—833,036833,036

Leaseliabilities

.

3.65%—7,619—7,6197,427

Total

.

833,0367,619—840,655840,463

Asat31December2024

Tradeandotherpayables

.

N/A1,093,322—1,093,3221,093,322

Borowings

.

2.70%−

3.10%

571,03786,541—657,578645,000

Leaseliabilities

.

3.45%1,905—1,9051,885

Total

.

1,666,26486,541—1,752,8051,740,207

Asat31March2025

Tradeandotherpayables

.

N/A983,078—983,078983,078

Borowings

.

1.40%−

3.10%

602,670110,178164,413877,261851,558

Leaseliabilities

.

3.45%1,903—1,9031,907

Total

.

1,587,651110,178164,4131,862,2421,836,543

Fairvaluemeasurement

ThisnoteprovidesinformationabouthowtheGroupdeterminesfairvalueofthefolowing

financialasetsthataremeasuredatfairvalueonarecuringbasis.

APENDIXIACOUNTANTS’REPORT

–I-104–

---

(i)FairvalueoftheGroup’sandtheCompany’sfinancialasetsthataremeasuredatfair

valueonarecuringbasis

GroupandCompany

Financialasets

31December

31December

31December

31March

Fairvalue

hierarchy

Valuation

technique(s)

andkey

input(s)

Significant

unobservable

input(s)

Relationshipof

unobservable

inputstofair

value

RMB’000RMB’000RMB’000RMB’000RMB’000RMB’000RMB’000RMB’000

Wealthmanagementproducts

.

1,789,327274,959—Level2Discounted

cashflows

model

N/AN/A

Unlistedequitysecurities

.

2,8052,1552,0931,877Level3NetasetsNetasets

value

Higherthe

netasets

value,

higherthe

fairvalue

TherewerenotransfersbetwenlevelsduringtheRelevantPeriods.

(i)ReconciliationofLevel3fairvaluemeasurements

DetailsofreconciliationofinancialasetsatFVTPLmeasuredatLevel3fairvalue

measurementaresetoutasbelow:

Asat31December

Asat31

March

RMB’000RMB’000RMB’000RMB’000

At1January

.

2,8622,8052,1552,093

Changeinfairvalue

.

(57)(650)(62)(216)

At31December/31March

.

2,8052,1552,0931,877

Nosensitivityanalysishavebenpresentedasthefectisinsignificant.

APENDIXIACOUNTANTS’REPORT

–I-105–

---

(i)Fairvalueofinancialasetsandfinancialiabilitiesthatarenotmeasuredatfairvalue

ThedirectorsoftheCompanyconsiderthathecaryingamountoftheGroup’sandthe

Company’sfinancialasetsandfinancialiabilitiesrecordedatamortisedcostintheHistorical

FinancialInformationaproximatetotheirfairvalues.Suchfairvalueshavebendeterminedin

acordancewithgeneralyaceptedpricingmodelsbasedondiscountedcashflowanalysis.

40.SHARE-BASEDPAYMENT

DuringtheRelevantPeriods,theCompanylaunchedandadoptedarestrictedshareschemein

2024(the“2024RestrictedShareScheme”)fortheprimarypurposeofatracting,retainingand

motivatingthemployesoftheGroup.Underthe2024RestrictedShareScheme,thedirectorsof

theCompanymaygrantupto5,080,000restrictedsharesundertheschemetoeligiblemployes,

includingthemployesoftheGroup,tobtainordinarysharesoftheCompanyuponvesting.

The2024RestrictedShareSchemewilbevalidandefectiveforaperiodof5years.

On3July2024,theGroupgranted4,080,000restrictedsharestoitsemployesatexercise

priceofRMB32pershare.

Setoutbelowaredetailsofthemovementsoftheoutstandingrestrictedsharesgrantedunder

the2024RestrictedShareSchemeduringtheRelevantPeriods:

Yearended31December2024

Thremonthsended31March

Weighted

average

exerciseprice

RMBNumber

Weighted

average

exerciseprice

RMBNumber

Outstandingathebeginingofthe

year/period

.

—323,900,000

Granteduringtheyear/period

.

324,080,00032815,000

Forfeiteduringtheyear/period

.

32(180,000)32(130,000)

Outstandingathendofthe

year/period

.

323,900,000324,585,000

APENDIXIACOUNTANTS’REPORT

–I-106–

---

RestrictedsharesgrantedinJuly2024

SubjectotheCompany’sperformanceapraisalandindividualperformanceapraisal,30%,

30%and40%ofrestrictedsharesgrantedinJuly2024wilbexercisablerespectively.The

lock-uperiodsandthedetailsoftheCompany’sperformanceapraisalaresumarisedinthe

tablebelow:

Performancetarget

Unlockingperiod

RevenueNetprofit

Target(Am1)Target(Am2)Target(B)

Firstunlockingperiod:Comencingfromthe

firstradingdayafterthexpiryofthe

12-monthperiodfromdateofgrantand

endingonthelastradingdayofthe

24-monthfromthedateofgrant

.

Revenuegrowthcomparedto

2023isnotlesthan100%

Revenuegrowthcomparedto

2023isnotlesthan50%

Netprofitispositive

Secondunlockingperiod:Comencingfrom

thefirstradingdayafterthexpiryofthe

24-monthperiodfromdateofgrantand

endingonthelastradingdayofthe

36-monthfromthedateofgrant

.

Revenuegrowthcomparedto

2023isnotlesthan150%

Revenuegrowthcomparedto

2023isnotlesthan100%

Netprofitispositiveandthe

growthisnotlesthan100%

comparedto2024

Thirdunlockingperiod:Comencingfromthe

firstradingdayafterthexpiryofthe

36-monthperiodfromdateofgrantand

endingonthelastradingdayofthe

48-monthfromthedateofgrant

.

Revenuegrowthcomparedto

2023isnotlesthan200%

Revenuegrowthcomparedto

2023isnotlesthan150%

Netprofitispositiveandgrows

notlesthan150%comparedto

Indicator

Performance

CompletionRatio

Company-Level

AtributionRatio

Revenue(A)

.

A≧Am1X=100%

Am2

≤

A

A

NetProfit(B)

.

B≧BmY=50%

B

RulesforDetermining

theCompany-LevelAtribution

RatioZValue

.

Company-LevelAtributionRatioZ=X+Y(isgreater

thanorequalto100%,itisuniformlyrecognized

as100%).

APENDIXIACOUNTANTS’REPORT

–I-107–

---

Apartfromabove-mentionedCompany’sperformanceapraisal,eligiblemployeshaveto

fulfilrequirementofindividualperformanceapraisal.Thenumberofsharesgrantedwilbe

calculatedas:expectednumberofsharestobegrantedtoparticulareligiblemployes,times

RatioZandratiofindividualperformanceapraisal.

Thetotalfairvalueoftherestrictedsharesgrantedunderthe2024RestrictedShareScheme

duringtheyearended31December2024wasaproximatelyRMB77,373,000.Thefairvaluewas

calculatedusingtheBlack-Scholesmodel.Themajorinputsinthemodelareasfolows:

ASharepriceatgrantdate(RMB)RMB47.95pershare

Expectedvolatilityin

theblack-outperiod

31.6163%,31.9980%and32.2365%for12months,24

monthsand36months,respectively

Dividendyield0%

Risk-frerate1.50%,2.10%and2.75%for12months,24monthsand36

months,respectively

ExpectedvolatilitywasdeterminedbyusingthehistoricalvolatilityofShenwan

SemiconductorIndex.Therisk-freinterestratewasbasedonthe1-year,2-year,and3-year

depositbenchmarkinterestratesdeterminedbythePeople’sBankofChina.Thevariablesand

asumptionsusedincomputingthefairvalueoftherestrictedsharesarebasedonmanagement’s

bestestimate.Thevalueofrestrictedsharesvarieswithdiferentvariablesofcertainsubjective

asumptions.Changeinvariablesandasumptionsmayresultinchangeinfairvaluesofthe

restrictedshares.

APENDIXIACOUNTANTS’REPORT

–I-108–

---

RestrictedsharesgrantedinMarch2025

SubjectotheCompany’sperformanceapraisalandindividualperformanceapraisal,30%,

30%and40%ofrestrictedsharesgrantedinMarch2025wilbexercisablerespectively.The

lock-uperiodsandthedetailsoftheCompany’sperformanceapraisalaresumarisedinthe

tablebelow:

Performancetarget

UnlockingperiodRevenueNetprofit

Target(Am1)Target(Am2)Target(B)

Firstunlockingperiod:Comencingfromthe

firstradingdayafterthexpiryofthe

12-monthperiodfromdateofgrantand

endingonthelastradingdayofthe

24-monthfromthedateofgrant

.

Revenuegrowthcomparedto

2023isnotlesthan150%

Revenuegrowthcomparedto

2023isnotlesthan100%

Netprofitispositiveandthe

growthisnotlesthan100%

comparedto2024

Secondunlockingperiod:Comencingfrom

thefirstradingdayafterthexpiryofthe

24-monthperiodfromdateofgrantand

endingonthelastradingdayofthe

36-monthfromthedateofgrant

.

Revenuegrowthcomparedto

2023isnotlesthan200%

Revenuegrowthcomparedto

2023isnotlesthan150%

Netprofitispositiveandthe

growthisnotlesthan150%

comparedto2024

Thirdunlockingperiod:Comencingfromthe

firstradingdayafterthexpiryofthe

36-monthperiodfromdateofgrantand

endingonthelastradingdayofthe

48-monthfromthedateofgrant

.

Revenuegrowthcomparedto

2023isnotlesthan250%

Revenuegrowthcomparedto

2023isnotlesthan200%

Netprofitispositiveandgrows

notlesthan200%comparedto

Indicator

PerformanceCompletion

Ratio

Company-LevelAtribution

Ratio

Revenue(A)

.

A≧Am1X=100%

Am2

≤

A

A

NetProfit(B)

.

B≧BmY=50%

B

RulesforDeterminingthe

Company-LevelAtributionRatioZ

Value

.

Company-LevelAtributionRatioZ=X+Y(isgreater

thanorequalto100%,itisuniformlyrecognized

as100%).

APENDIXIACOUNTANTS’REPORT

–I-109–

---

Apartfromabove-mentionedCompany’sperformanceapraisal,eligiblemployeshaveto

fulfilrequirementofindividualperformanceapraisal.Thenumberofsharesgrantedwilbe

calculatedas:expectednumberofsharestobegrantedtoparticulareligiblemployes,times

RatioZandratiofindividualperformanceapraisal.

Thetotalfairvalueoftherestrictedsharesgranteduringthethremonthsended31March

2025wasaproximatelyRMB29,427,000.ThefairvaluewascalculatedusingtheBlack-Scholes

model.Themajorinputsinthemodelareasfolows:

ASharepriceatgrantdate(RMB)RMB65.83pershare

Expectedvolatilityintheblack-out

period

39.0261%,36.7661%and35.1233%for12months,24

monthsand36months,respectively

Dividendyield0%

Risk-frerate1.50%,2.10%and2.75%for12months,24monthsand36

months,respectively

ExpectedvolatilitywasdeterminedbyusingthehistoricalvolatilityofShenwan

SemiconductorIndex.Therisk-freinterestratewasbasedonthe1-year,2-year,and3-year

depositbenchmarkinterestratesdeterminedbythePeople’sBankofChina.Thevariablesand

asumptionsusedincomputingthefairvalueoftherestrictedsharesarebasedonmanagement’s

bestestimate.Thevalueofrestrictedsharesvarieswithdiferentvariablesofcertainsubjective

asumptions.Changeinvariablesandasumptionsmayresultinchangeinfairvaluesofthe

restrictedshares.

Fortheyearended31December2024andthethremonthsended31March2025,theGroup

recognizedshare-basedpaymentexpensesofaproximatelyRMB10,209,000andRMB5,194,000,

respectively.

APENDIXIACOUNTANTS’REPORT

–I-110–

---

41.RECONCILIATIONOFLIABILITIESARISINGFROMFINANCINGACTIVITIES

ThetablebelowdetailschangesintheGroup’sliabilitiesarisingfromfinancingactivities,

includingbothcashandnon-cashchanges.Liabilitiesarisingfromfinancingactivitiesarethose

forwhichcashflowswere,orfuturecashflowswilbe,clasifiedintheGroup’sconsolidated

statementsofcashflowsascashflowsfromfinancingactivities.

Borowings

Lease

liabilities

Interest

payables

(includedin

other

payables)Total

RMB’000RMB’000RMB’000RMB’000

At1January2022

.

—977—977

Financingcashflows

—Repaymentofleasesliabilities

.

—(4,480)—(4,480)

—Interestpaidonleasesliabilities

.

—(127)—(127)

Non-cashchanges

—Newleases

.

—7,451—7,451

—Interestexpenserecognised

.

—127—127

At31December2022and

1January2023

.

—3,948—3,948

Financingcashflows

—Procedsfrombankborowings

.

3,150—3,150

—Interestpaidonborowings

.

—(3)(3)

—Repaymentofleaseliabilities

.

—(7,340)—(7,340)

—Interestpaidonleaseliabilities

.

—(214)—(214)

Non-cashchanges

—Earlyterminationofleases

.

—(780)—(780)

—Newleases

.

—19,568—19,568

—Interestexpenserecognised

.

—2143217

At31December2023and

1January2024

.

3,15015,396—18,546

APENDIXIACOUNTANTS’REPORT

–I-111–

---

Borowings

Lease

liabilities

Interest

payables

(includedin

other

payables)Total

RMB’000RMB’000RMB’000RMB’000

At31December2023and

1January2024

.

3,15015,396—18,546

Financingcashflows

—Procedsfrombankborowings

.

700,000—700,000

—Repaymentofbankborowings

.

(8,150)—(8,150)

—Interestpaidonborowings

.

—(7,404)(7,404)

—Repaymentofleaseliabilities

.

—(12,746)—(12,746)

—Interestpaidonleaseliabilities

.

—(393)—(393)

Non-cashchanges

—Newleases

.

—2,198—2,198

—Terminationofleases

.

—(887)—(887)

—Interestexpenserecognised

.

—3937,9428,335

At31December2024and

1January2025

.

695,0003,961538699,499

Financingcashflows

—Procedsfrombankborowings

.

325,742—325,742

—Repaymentofbankborowings

.

(100,000)—(100,000)

—Interestpaidonborowings

.

—(5,571)(5,571)

—Repaymentofleaseliabilities

.

—(883)—(883)

—Interestpaidonleaseliabilities

.

—(39)—(39)

Non-cashchanges

—Interestexpenserecognised

.

—395,9145,953

At31March2025

.

920,7423,078881924,701

APENDIXIACOUNTANTS’REPORT

–I-112–

---

Borowings

Lease

liabilities

Interest

payables

(includedin

other

payables)Total

RMB’000RMB’000RMB’000RMB’000

At31December2023and

1January2024

.

3,15015,396—18,546

Financingcashflows

—Procedsfrombankborowings

.

100,000—100,000

—Repaymentofbankborowings

.

(3,150)—(3,150)

—Interestpaidonborowings

.

—(22)(22)

—Repaymentofleaseliabilities

.

—(3,602)—(3,602)

—Interestpaidonleaseliabilities

.

—(131)(131)

Non-cashchanges

—Newleases

.

—1,322—1,322

—Interestexpenserecognised

.

—13122153

At31March2024(Unaudited)

.

100,00013,116—113,116

42.CAPITALCOMITMENTS

TheGrouphascapitalcomitmentsundernon-cancelablecontractsasfolows:

Asat31December

Asat

31March

RMB’000RMB’000RMB’000RMB’000

Acquisitionofproperty,plantand

equipment

.

13,963344,998123,584134,684

Capitalcontributionpayabletoan

asociate

.

—2,842—

13,963344,998126,426134,684

APENDIXIACOUNTANTS’REPORT

–I-113–

---

TheCompanyhascapitalcomitmentsundernon-cancelablecontractsasfolows:

Asat31December

Asat

31March

RMB’000RMB’000RMB’000RMB’000

Acquisitionofproperty,plantand

equipment

.

13,96324,5007,5472,046

Capitalcontributionpayableto

subsidiaries

.

238,000288,000308,000258,000

251,963312,500315,547260,046

43.RELATEDPARTYTRANSACTIONSANDBALANCES

TherelatedpartiesoftheGroupduringtheRelevantPeriodsareasfolows:

NamesofrelatedpartiesRelationship

SuzhouDaboNewMaterialsTechnology

Co.,Ltd.

.

AsociateoftheCompany

JinanTianyeConstructionMachineryCo.,

Ltd.(Note)

.

Controledbycontrolingshareholderofthe

Company

JiningWeishiteInformationTechnology

DevelopmentCo.,Ltd.(Note)

.

Controledbyclosefamilymemberofthe

controlingshareholderoftheCompany

ShandongTianyiQuartzProductsCo.,Ltd.

(Note)

.

Controledbyclosefamilymemberofthe

controlingshareholderoftheCompany

PrivateCompanyanditsubsidiaries

.

Holdingover5%ofCompany’sisuedshares

Note:TheEnglishnamesoftherelatedpartiesregisteredinthePRCmentionedaboverepresenthebestefortsmadeby

managementoftheCompanytotranslatetheirChinesenamesastheydonothaveoficialEnglishnames.

Inaditiontothetransactionsandbalancesdisclosedinrespectivenotes,theGrouphadthe

folowingsignificantransactionsandbalanceswithrelatedpartiesduringtheRelevantPeriods:

APENDIXIACOUNTANTS’REPORT

–I-114–

---

(a)Relatedpartytransactions:

(i)Fepaidtorelatedpartiesforservices/gods

Yearended31December

Thremonthsended

31March

RMB’000RMB’000RMB’000RMB’000RMB’000

(Unaudited)

JiningWeishiteInformation

TechnologyDevelopment

Co.,Ltd.

.

1,16237,63721,95312,312509

JinanTianyeConstruction

MachineryCo.,Ltd.

.

—30—

ShandongTianyiQuartzProducts

Co.,Ltd.

.

34,349—

35,51137,63721,98312,312509

(i)Revenuefromrelatedparties

Yearended31December

Thremonthsended

31March

RMB’000RMB’000RMB’000RMB’000RMB’000

(Unaudited)

PrivateCompanyandits

subsidiaries

.

110,61818,29742,09916,60113,663

SuzhouDaboNewMaterials

TechnologyCo.,Ltd.

.

—1,947—2,212

110,61818,29744,04616,60115,875

APENDIXIACOUNTANTS’REPORT

–I-115–

---

(i)TheGroupaslese

Yearended31December

Thremonthsended

31March

RMB’000RMB’000RMB’000RMB’000RMB’000

(Unaudited)

Short-termleasesexpensespaid

JiningWeishiteInformation

TechnologyDevelopmentCo.,

Ltd.

.

—3,300—1,650

JinanTianyeConstruction

MachineryCo.,Ltd.

.

3132973,6841351,879

(b)Relatedpartybalances:

Asathendofeachreportingperiod,theGrouphadbalanceswithrelatedpartiesas

folows:

Asat31December

Asat

31March

RMB’000RMB’000RMB’000RMB’000

Tradereceivables

PrivateCompanyanditsubsidiaries

.

14,86313,22719,19110,997

SuzhouDaboNewMaterials

TechnologyCo.,Ltd.

.

—2002,500

14,86313,22719,39113,497

Prepayment

JiningWeishiteInformation

TechnologyDevelopmentCo.,Ltd.

.

1,500—

JinanTianyeConstructionMachinery

Co.,Ltd.

.

249249—

1,749249—

Othereceivables

JiningWeishiteInformation

TechnologyDevelopmentCo.,Ltd.

.

—550550

APENDIXIACOUNTANTS’REPORT

–I-116–

---

Asat31December

Asat

31March

RMB’000RMB’000RMB’000RMB’000

Tradepayables

JiningWeishiteInformation

TechnologyDevelopmentCo.,Ltd.

.

—492174159

Otherpayables

ZongYanmin

.

10050—

JinanTianyeConstructionMachinery

Co.,Ltd.

.

1533125—

11583125—

Therelatedpartybalancesabovearealtradeinature.

(c)Compensationofkeymanagementpersonel:

Keymanagementpersonelarethosepersonshavingauthorityandresponsibilityfor

planing,directingandcontrolingtheactivitiesoftheGroup.

TheremunerationofthedirectorsoftheCompanyandothermembersofkeymanagementof

theGroupduringtheRelevantPeriodswereasfolows:

Yearended31December

Thremonthsended31

March

RMB’000RMB’000RMB’000RMB’000RMB’000

(Unaudited)

Directors’fe,salariesand

otherbenefits

.

6,2479,9349,0762,4162,193

Performance-basedbonus

.

4,6191,3522,478139

Retirementbenefitscheme

contributions

.

11,43111,92712,1032,5912,414

Theremunerationofkeymanagementisdeterminedwithreferencetotheperformanceofthe

individualsandmarketrends.

APENDIXIACOUNTANTS’REPORT

–I-117–

---

44.SUBSEQUENTEVENTS

OtherthanthosedisclosedelsewhereintheHistoricalFinancialInformation,thereareno

materialsubsequenteventsundertakenbytheGroupafter31March2025anduptothedateofthis

report.

I.SUBSEQUENTFINANCIALSTATEMENTS

NoauditedfinancialstatementsoftheGroup,theCompanyoranyofitsubsidiarieshave

benpreparedinrespectofanyperiodsubsequento31March2025.

APENDIXIACOUNTANTS’REPORT

–I-118–

---

(A)UNAUDITEDPROFORMASTATEMENTOFADJUSTEDCONSOLIDATEDNET

TANGIBLEASETS

Thefolowingunauditedproformastatementofadjustedconsolidatednetangibleasetsof

theGroupatributabletownersoftheCompanypreparedinacordancewithparagraph4.29of

theListingRulesisforilustrativepurposeonly,andisetfortheretoilustratethefectofthe

GlobalOferingontheunauditedconsolidatednetangibleasetsoftheGroupatributableto

ownersoftheCompanyasof31March,2025asiftheGlobalOferinghadtakenplaceon31

March,2025.

ThisunauditedproformastatementofadjustedconsolidatednetangibleasetsoftheGroup

atributabletownersoftheCompanyhasbenpreparedforilustrativepurposesonlyand,

becauseofitshypotheticalnature,itmaynotgiveatruepictureoftheconsolidatednetangible

asetsoftheGroupatributabletownersoftheCompanyasof31March,2025oratanyfuture

datesfolowingtheGlobalOfering.Itispreparedbasedontheauditedconsolidatednetangible

asetsoftheGroupatributabletownersoftheCompanyasof31March,2025asetoutinthe

Acountants’ReportonhistoricalfinancialinformationoftheGroup,thetextofwhichisetout

inApendixItothisProspectus,andadjustedasdescribedbelow.

Audited

consolidated

netangible

asetsof

theGroup

atributableto

ownersofthe

Companyasof

31March,

Estimatednet

procedsfrom

theGlobal

Ofering

Unauditedpro

formadjusted

consolidated

netangible

asetsof

theGroup

atributableto

ownersofthe

Companyasof

31March,

Unauditedproformadjusted

consolidatednetangibleasets

oftheGroupatributableto

ownersoftheCompanyasof

31March,2025perShare

RMB’000RMB’000RMB’000RMBHK$

(Note1)(Note2)(Note3)(Note3&4)

BasedontheOfer

PriceofHK$42.80

HShare

.

5,312,1941,765,2667,077,46014.8916.34

APENDIXIUNAUDITEDPROFORMAFINANCIALINFORMATION

–I-1–

---

Notes:

(1)TheunauditedconsolidatednetangibleasetsoftheGroupatributabletownersoftheCompanyasof31March,

2025isextractedfromtheAcountants’ReportsetoutinApendixItothisProspectus,whichisbasedonthe

auditedconsolidatednetasetsofourGroupatributabletownersoftheCompanyasof31March2025of

aproximatelyRMB5,328,484,000withanadjustmentforintangibleasetsasof31March,2025ofaproximately

RMB16,290,000.

(2)ThestimatednetprocedsfromtheGlobalOferingarebasedontheOferPriceofHK$42.80,afterdeductionof

thestimatedunderwritingfesandotherelatedlistingexpenditurepayablebytheCompany(excludingthelisting

expensethathavebenchargedtoprofitorlosduringtheTrackRecordPeriod),takingintonoacountofshares

whichmaybeisueduponthexerciseoftheover-alotmentoptionanduponthevestingofrestrictedsharesthat

havebenormaybegrantedfromtimetotimeundertherestrictedsharescheme.

(3)TheunauditedproformadjustedconsolidatednetangibleasetsoftheGroupatributabletownersofthe

Companyasof31March,2025pershareiscalculatedbasedonatotalof475,450,860shares(representing

429,711,044sharesinisueasof31March,2025,excluding2,005,884treasurysharesasof31March,2025,

ading47,745,700ofersharesundertheGlobalOfering),asumingthatheGlobalOferinghadbencompleted

on31March,2025butdoesnotakeintoacountofanyshareswhichmaybeisueduponthexerciseofthe

over-alotmentoptionanduponthevestingofrestrictedsharesthathavebenormaybegrantedfromtimetotime

undertherestrictedsharescheme.

(4)CertainpropertyinterestsoftheGroupasat31May,2025havebenvaluedbyanindependentpropertyvalueras

mentionedinApendixI.BycomparingthemarketvalueofthesepropertyinterestsofRMB1,264,338,000and

thecaryingamountofthesepropertyinterestsofRMB1,243,167,000,thereisfairvaluegainofRMB21,171,000

asat31May,2025,whichisnotreflectedintheaboveconsolidatednetangibleasetsoftheGroupat31March,

2025.TherevaluationgainhasnotbenincludedintheHistoricalFinancialInformationasat31March,2025as

setoutinApendixItothisprospectus.IftherevaluationgainwasrecordedintheGroup’sfinancialstatements,

thedepreciationoftheGroupwouldincreasebyaproximatelyRMB408,000fortheyearending31December,

2025.

(5)ForthepurposeofthisunauditedproformastatementofadjustedconsolidatednetangibleasetsoftheGroup

atributabletownersoftheCompanyasof31March,2025perShare,theamountstatedinRenminbiare

convertedfromorintoHongKongdolarsatanexchangerateofHK$1.0toRMB0.9108.Norepresentationis

madethatRMBhasben,couldhavebenormaybeconvertedintoHK$,orviceversa,athatrate.

(6)NoadjustmenthasbenmadetotheunauditedproformadjustedconsolidatednetangibleasetsoftheGroup

atributabletownersoftheCompanyasof31March,2025toreflectanytradingresultsorothertransactionsof

theGroupenteredintosubsequento31March,2025.

APENDIXIUNAUDITEDPROFORMAFINANCIALINFORMATION

–I-2–

---

Thefolowingisthetextofareport,preparedforthesolepurposeofinclusioninthis

documentreceivedfromtheindependentreportingacountantsoftheCompany,BDOLimited,

CertifiedPublicAcountants,HongKong.

Tel : +852 2218 8288

Fax : +852 2543 1051

w.bdo.com.hk

(cid:26373)(cid:23453) : +852 2218 8288

(cid:10178)(cid:2353) : +852 2543 1051

w.bdo.com.hk

th

Flor Wing On Centre

111 Conaught Road Central

Hong Kong

(cid:3034)(cid:2196)(cid:1652)(cid:23593)(cid:2867)(cid:1048)111(cid:22457)

(cid:2123)(cid:1549)(cid:1048)(cid:1718)25(cid:15779)

INDEPENDENTREPORTINGACOUNTANTS’ASURANCEREPORTONTHE

COMPILATIONOFUNAUDITEDPROFORMAFINANCIALINFORMATION

TothedirectorsofSICo.,Ltd.

Wehavecompletedourasurancengagementoreportonthecompilationofunauditedpro

formafinancialinformationofSICo.,Ltd.(the“Company”)anditsubsidiaries(colectively

the“Group”)bythedirectorsoftheCompany(the“Directors”)forilustrativepurposesonly.The

unauditedproformafinancialinformationconsistsoftheunauditedproformastatementof

adjustedconsolidatednetangibleasetsoftheGroupasat31March2025andrelatednotes(the

“UnauditedProFormaFinancialInformation”)asetoutonI-1toI-2ofApendixIofthe

Company’sprospectusdated11August2025(the“Prospectus”)inconectionwiththeproposed

initialpublicoferingoftheHsharesoftheCompany(the“ProposedPublicOfer”).The

aplicablecriteriaonthebasisofwhichtheDirectorshavecompiledtheUnauditedProForma

FinancialInformationaredescribedonI-1toI-2oftheProspectus.

TheunauditedproformafinancialinformationhasbencompiledbytheDirectorsto

ilustratetheimpactoftheProposedPublicOferontheGroup’sconsolidatedfinancialpositionas

at31March2025asiftheProposedPublicOferhadtakenplaceat31March2025.Aspartof

thisproces,informationaboutheGroup’sconsolidatedfinancialpositionhasbenextractedby

theDirectorsfromtheGroup’sfinancialinformationforthethremonthsended31March2025,

onwhichanacountants’reportsetoutinApendixIoftheProspectushasbenpublished.

APENDIXIUNAUDITEDPROFORMAFINANCIALINFORMATION

–I-3–

---

Directors’ResponsibilityfortheUnauditedProFormaFinancialInformation

TheDirectorsareresponsibleforcompilingtheUnauditedProFormaFinancialInformation

inacordancewithparagraph4.29oftheRulesGoverningtheListingofSecuritiesonTheStock

ExchangeofHongKongLimited(the“ListingRules”)andwithreferencetoAcounting

Guideline7“PreparationofProFormaFinancialInformationforInclusioninInvestment

Circulars”(“AG7”)isuedbytheHongKongInstituteofCertifiedPublicAcountants

(“HKICPA”).

OurIndependenceandQualityManagement

Wehavecompliedwiththeindependenceandotherethicalrequirementsofthe“Codeof

EthicsforProfesionalAcountants”isuedbytheHKICPA,whichisfoundedonfundamental

principlesofintegrity,objectivity,profesionalcompetenceanduecare,confidentialityand

profesionalbehavior.

OurfirmapliesHongKongStandardonQualityManagement1“QualityManagementfor

FirmsthatPerformAuditsorReviewsofFinancialStatements,orOtherAsuranceorRelated

ServicesEngagements”isuedbytheHKICPA,whichrequiresthefirmtodesign,implementand

operateasystemofqualitymanagementincludingpoliciesorproceduresregardingcompliance

withethicalrequirements,profesionalstandardsandaplicablelegalandregulatoryrequirements.

ReportingAcountants’Responsibilities

Ouresponsibilityistoexpresanopinion,asrequiredbyparagraph4.29(7)oftheListing

Rules,ontheUnauditedProFormaFinancialInformationandtoreportouropiniontoyou.Wedo

notaceptanyresponsibilityforanyreportspreviouslygivenbyusonanyfinancialinformation

usedinthecompilationoftheUnauditedProFormaFinancialInformationbeyondthatowedto

thosetowhomthosereportswereadresedbyusathedatesoftheirisue.

WeconductedourengagementinacordancewithHongKongStandardonAsurance

Engagements3420“AsuranceEngagementstoReportontheCompilationofProFormaFinancial

InformationIncludedinaProspectus”isuedbytheHKICPA.Thistandardrequiresthathe

reportingacountantsplanandperformprocedurestobtainreasonableasuranceaboutwhether

theDirectorsoftheCompanyhavecompiledtheUnauditedProFormaFinancialInformationin

acordancewithparagraph4.29oftheListingRulesandwithreferencetoAG7isuedbythe

HKICPA.

APENDIXIUNAUDITEDPROFORMAFINANCIALINFORMATION

–I-4–

---

Forpurposesofthisengagement,wearenotresponsibleforupdatingoreisuinganyreports

oropinionsonanyhistoricalfinancialinformationusedincompilingtheUnauditedProForma

FinancialInformation,norhavewe,inthecourseofthisengagement,performedanauditor

reviewofthefinancialinformationusedincompilingtheUnauditedProformaFinancial

Information.

Thepurposeofunauditedproformafinancialinformationincludedinaprospectusisolely

toilustratetheimpactofasignificanteventortransactiononunadjustedfinancialinformationof

thentityasiftheventhadocuredorthetransactionhadbenundertakenatanearlierdate

selectedforpurposesoftheilustration.Acordingly,wedonotprovideanyasurancethathe

actualoutcomeoftheProposedPublicOferat31March2025wouldhavebenaspresented.

Areasonableasurancengagementoreportonwhethertheunauditedproformafinancial

informationhasbenproperlycompiledonthebasisoftheaplicablecriteriainvolvesperforming

procedurestoaseswhethertheaplicablecriteriausedbythedirectorsinthecompilationofthe

unauditedproformafinancialinformationprovideareasonablebasisforpresentingthesignificant

efectsdirectlyatributabletotheventortransaction,andtobtainsuficientapropriate

evidenceaboutwhether:

(cid:129)therelatedproformadjustmentsgiveapropriatefectothosecriteria;and

(cid:129)theunauditedproformafinancialinformationreflectstheproperaplicationofthose

adjustmentstotheunadjustedfinancialinformation.

Theprocedureselectedependonthereportingacountants’judgment,havingregardtothe

reportingacountants’understandingofthenatureofthentity,theventortransactioninrespect

ofwhichtheunauditedproformafinancialinformationhasbencompiled,andotherelevant

engagementcircumstances.

Thengagementalsoinvolvesevaluatingtheoveralpresentationoftheunauditedproforma

financialinformation.

Webelievethathevidencewehaveobtainedisuficientandapropriatetoprovideabasis

forouropinion.

APENDIXIUNAUDITEDPROFORMAFINANCIALINFORMATION

–I-5–

---

Opinion

Inouropinion:

(a)theUnauditedProFormaFinancialInformationhasbenproperlycompiledbythe

Directorsonthebasistated;

(b)suchbasisisconsistentwiththeacountingpoliciesoftheGroup;and

(c)theadjustmentsareapropriateforthepurposesoftheUnauditedProFormaFinancial

Informationasdisclosedpursuantoparagraph4.29(1)oftheListingRules.

BDOLimited

CertifiedPublicAcountants

HongKong

11August2025

APENDIXIUNAUDITEDPROFORMAFINANCIALINFORMATION

–I-6–

---

Thefolowingisthetextofaleterandvaluationcertificatepreparedforthepurposeof

incorporationinthisprospectusreceivedfromAsia-PacificConsultingandApraisalLimited,an

independentpropertyvaluer,inconectionwithitsvaluationasat31May2025oftheselected

propertyinterestsoftheGroup.

Asia-PacificConsultingandApraisalLimited

Flat/RmA,12/F

KiuFuComercialBuilding

300LockhartRoad

WanChai

HongKong

August11,2025

TheBoardofDirectors

SICO.,LTD.

No.99,SouthTianyueRoad,

HuaiyinDistrict,

JinanCity,

ShandongProvince,

ThePRC

DearSirs,

Instructions,PurposeandDateofValuation

InacordancewithyourinstructionstovalueselectedthepropertyinterestsheldbySIC

CO.,LTD.(the“Company”)anditsubsidiaries(hereinaftertogethereferedtoasthe“Group”)

inthePeople’sRepublicofChina(the“PRC”).Weconfirmthatwehavecariedoutinspections,

maderelevantenquiriesandsearchesandobtainedsuchfurtherinformationasweconsider

necesaryforthepurposeofprovidingyouwithouropiniononthemarketvaluesoftheproperty

interestsasat31May2025(the“ValuationDate”).

APENDIXIPROPERTYVALUATIONREPORT

–I-1–

---

TheselectedpropertyinterestsformpartoftheGroup’snon-propertyactivitiesthathasa

caryingamountof15%ormoreoftheGroup’stotalasetsandthereforethevaluationreportof

thispropertyinterestsisrequiredtobeincludedinthisprospectus.

BasisofValuation

Ourvaluationwascariedoutonamarketvaluebasis.Marketvalueisdefinedas“the

estimatedamountforwhichanasetorliabilityshouldexchangeontheValuationDatebetwena

wilingbuyerandawilingselerinanarm’s-lengthtransactionafterpropermarketingandwhere

thepartieshadeachactedknowledgeably,prudently,andwithoutcompulsion”.

MethodsofValuation

Duetothenatureofthebuildingsandstructuresofthepropertiesandtheparticularlocation

inwhichtheyaresituated,thereareunlikelytoberelevantmarketcomparablesalesreadily

available,thebuildingsandstructuresofthepropertieshavebenvaluedbythecostaproach

withreferencetotheirdepreciatedreplacementcosts.

Depreciatedreplacementcostisdefinedas“thecurentcostofreplacinganasetwithits

modernequivalentasetlesdeductionsforphysicaldeteriorationandalrelevantformsof

obsolescenceandoptimization.”Itisbasedonanestimateofthemarketvalueforthexistinguse

oftheland,plusthecurentcostofreplacementoftheimprovements,lesdeductionforphysical

deteriorationandalrelevantformsofobsolescenceandoptimization.Inarivingathevalueof

thelandportion,referencehasbenmadetothesalesevidenceasavailableinthelocality.The

depreciatedreplacementcostofthepropertyinterestisubjectoadequatepotentialprofitability

oftheconcernedbusines.Inourvaluation,itapliestothewholeofthecomplexordevelopment

asauniqueinterest,andnopiecemealtransactionofthecomplexordevelopmentisasumed.

ValuationAsumptions

Ourvaluationhasbenmadeontheasumptionthatheselerselsthepropertyinterestsin

themarketwithouthebenefitofadeferedtermcontract,leaseback,jointventure,management

agrementoranysimilararangement,whichcouldservetoafecthevaluesoftheproperty

interests.

Noalowancehasbenmadeinoureportforanycharge,mortgageoramountowingonany

ofthepropertyinterestsvaluednorforanyexpenseortaxationwhichmaybeincuredinefecting

asale.Unlesotherwisestated,itisasumedthathepropertiesarefrefromencumbrances,

restrictionsandoutgoingsofanonerousnature,whichcouldafectheirvalues.

APENDIXIPROPERTYVALUATIONREPORT

–I-2–

---

ValuationStandards

Invaluingthepropertyinterests,wehavecompliedwithalrequirementscontainedin

Chapter5andPracticeNote12oftheRulesGoverningtheListingofSecuritiesisuedbyThe

StockExchangeofHongKongLimited;theRICSValuation—ProfesionalStandardspublished

bytheRoyalInstitutionofCharteredSurveyors;theHKISValuationStandardspublishedbythe

HongKongInstituteofSurveyors,andtheInternationalValuationStandardsisuedbythe

InternationalValuationStandardsCouncil.

SourceofInformation

WehavereliedtoaveryconsiderablextentontheinformationgivenbytheGroupandhave

aceptedadvicegiventousonsuchmatersastenure,planingaprovals,statutorynotices,

easements,particularsofocupancy,letings,andalotherelevantmaters.

Wehavehadnoreasontodoubthetruthandacuracyoftheinformationprovidedtousby

theGroup.WehavealsosoughtconfirmationfromtheGroupthatnomaterialfactorshaveben

omitedfromtheinformationsuplied.Weconsiderthatwehavebenprovidedwithsuficient

informationtoariveaninformedview,andwehavenoreasontosuspecthatanymaterial

informationhasbenwitheld.

DocumentandTitleInvestigation

WehavebenshowncopiesofvarioustitledocumentsincludingRealEstateTitle

Certificatesandotheroficialpermitsrelatingtothepropertyinterestsandhavemaderelevant

enquiries.Whereposible,wehavexaminedtheoriginaldocumentstoverifythexistingtitleto

thepropertyinterestsinthePRCandanymaterialencumbrancethatmightbeatachedtothe

propertyinterestsoranytenancyamendment.Wehavereliedconsiderablyontheadvicegivenby

theCompany’sPRCLegalAdvisor—GrandalLawFirm(Shanghai),concerningthevalidityof

thepropertyinterestsinthePRC.

AreaMeasurementandInspection

Wehavenotcariedoutdetailedmeasurementstoverifythecorectnesoftheareasin

respectofthepropertiesbuthaveasumedthatheareashownonthetitledocumentsandoficial

siteplanshandedtousarecorect.Aldocumentsandcontractshavebenusedasreferenceonly

andaldimensions,measurementsandareasareaproximations.Non-sitemeasurementhasben

taken.

APENDIXIPROPERTYVALUATIONREPORT

–I-3–

---

Wehaveinspectedthexteriorand,whereposible,theinterioroftheproperties.However,

wehavenotcariedoutinvestigationtodeterminethesuitabilityofthegroundconditionsand

servicesforanydevelopmenthereon.Ourvaluationhasbenpreparedontheasumptionthat

theseaspectsaresatisfactoryandthatnounexpectedcostandelaywilbeincureduring

construction.Moreover,nostructuralsurveyhasbenmade,butinthecourseofourinspection,

wedidnotnoteanyseriousdefect.Wearenot,however,abletoreportwhetherthepropertiesare

freofrot,infestationoranyotherstructuraldefect.Notestswerecariedoutonanyofthe

services.

ThesiteinspectionwascariedoutinFebruary2025byMs.KayLiuwhoisamemberof

CertifiedPublicValuerandhasover10years’experienceinpropertyvaluationinthePRC.

Curency

AlmonetaryfigurestatedinthisreportareinRenminbi(RMB).

Ourvaluationcertificateisatachedbelowforyouratention.

Yoursfaithfuly,

forandonbehalfof

Asia-PacificConsultingandApraisalLimited

DavidG.D.Cheng

MRICS

ExecutiveDirector

Note:DavidG.D.ChengisaCharteredSurveyorwhohasover20years’experienceinthevaluationofasetsinthe

GreaterChinaRegion,theAsia-Pacificregion,theUnitedStatesandCanada.

APENDIXIPROPERTYVALUATIONREPORT

–I-4–

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VALUATIONCERTIFICATE

PropertyinterestsheldandocupiedbytheGroupinthePRC

PropertyDescriptionandtenure

Particulars

ofocupancy

Marketvaluein

existingstateasat

theValuationDate

RMB

Aparcelofland,

7buildingsand

varioustructures

locatedinNos.

1959and1989,

FeizhouRoad,

PudongNewArea,

Shanghai,

ThePRC

Thepropertycomprisesaparcelofland

withasiteareaofaproximately86,797.47

sq.m.and7buildingsandvariousancilary

structureserectedthereonwhichwere

completedin2023.

The7buildingshaveatotalgrosflorarea

ofaproximately93,896.67sq.m.,include3

workshops,awarehouse,aguardhouse,a

hydrogenstationandapowersubstation.

Thestructuresmainlyincludepols,pipe

network,roadsandboundarywals.

Thelanduserightsofthepropertyhave

bengrantedtotheGroupforaterm

expiringon16December2070forindustry

use.

Thepropertyis

curentlyocupiedby

theGroupfor

productionand

ancilarypurposes.

1,264,338,000

Notes:

1.PursuantoaState-ownedLandUseRightsGrantContract—HuFreTradeZoneLingang(2024)State-Owned

ConstructionLandUseContractNo.19,thelanduserightsofaparceloflandwithasiteareaofaproximately

86,797.47sq.m.werecontractedtobegrantedtoShanghaiTianyueSemiconductorMaterialsCo.,Ltd.(上海天岳半

导体材料有限公司,“ShanghaiTianyue”),foratermof50yearsforindustrialusecomencingfromtheland

deliverydate.ThelandpremiumwasRMB98,250,000.

2.PursuantoaRealEstateTitleCertificate–Hu（2025）ShiZiBuDongChanQuanDiNo.000135,thelanduse

rightsofaparceloflandwithasiteareaofaproximately86,797.47sq.m.havebengrantedtoShanghaiTianyue

foratermexpiringon16December2070forindustryuse,and7buildingswithatotalgrosflorareaof

aproximately93,896.67sq.m.areownedbyShanghaiTianyue.

3.WehavebenprovidedwithalegalopinionregardingthepropertyinterestbytheCompany’sPRClegaladvisers,

whichcontains,interalia,thefolowing:

ShanghaiTianyuelegalyownsthebuildingandthelanduserightswithinthescopeocupiedbythebuilding,

withinthevalidityperiodandforthepurposespecifiedintheRealEstateTitleCertificate.ShanghaiTianyuehas

obtainedtheRealEstateTitleCertificateandisentitledtolawfulyposes,use,benefitfrom,transfer,lease,

mortgage,orotherwisedisposeofthepropertywithinthecorespondingvalidityperiod,incompliancewiththe

restrictionspecifiedintheRealEstateTitleCertificate.

APENDIXIPROPERTYVALUATIONREPORT

–I-5–

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TAXATIONOFSECURITYHOLDERS

IncometaxandcapitalgainstaxofholdersoftheHsharesisubjectothelawsand

practicesofthePRCandofjurisdictionsinwhicholdersoftheHsharesareresidentorotherwise

subjectotax.Thefolowingsumaryofcertainrelevantaxationprovisionsisbasedoncurent

lawsandpractices,andhasnotakenintoacounthechangeoramendmentotherelevantlaws

orpoliciesandoesnotconstituteanyopinionoradvice.Thediscusiondoesnotdealwithal

posibletaxconsequencesrelatingtoaninvestmentintheHshares,nordoesitakeintoacount

thespecificircumstancesofanyparticularinvestor,someofwhichmaybesubjectospecial

regulation.Acordingly,youshouldconsultyourowntaxadviseregardingthetaxconsequences

ofaninvestmentintheHshares.Thediscusionisbaseduponlawsandrelevantinterpretationsin

efectasoftheLatestPracticableDate,whicharesubjectochangeoradjustmentandmayhave

retrospectivefect.

ThisdiscusiondoesnotadresanyaspectsofPRCtaxationotherthanincometax,capital

gainstaxandprofitstax,salestax,value-adedtax,stampdutyandestateduty.Prospective

investorsareurgedtoconsultheirfinancialadvisersregardingthePRCandothertax

consequencesofowningandisposingoftheHshares.

ThePRCTaxation

TaxonDividends

IndividualInvestors

AcordingtotheIndividualIncomeTaxLawofthePRC(《中华人民共和国个人所得税法》)

(the“ITLaw”)promulgatedbytheSCNPConSeptember10,1980,lastamendedonAugust31,

2018andimplementedonJanuary1,2019,andtheImplementationRulesoftheIndividualIncome

TaxLawofthePRC(《中华人民共和国个人所得税法实施条例》)promulgatedbytheState

CouncilonJanuary28,1994,lastamendedonDecember18,2018andimplementedonJanuary1

2019,forindividualincomeincludinginterest,dividendandbonus,aresubjectoindividual

incometaxwithaplicableproportionaltaxrateof20%.Foraforeignindividualwhoisnota

residentofthePRC,thereceiptofdividendsfromanenterpriseinthePRCisnormalysubjecto

individualincometaxof20%unlespecificalyexemptedbythetaxauthorityoftheState

Counciloreducedbyrelevantaxtreaty.

Meanwhile,acordingtotheNoticeonIsuesConcerningDiferentiatedIndividualIncome

TaxPoliciesonDividendsandBonusofListedCompanies(《关于上市公司股息红利差别化个人

所得税政策有关问题的通知》)jointlyisuedbytheMOF,theSTAandtheCSRConSeptember7,

2015,efectiveonSeptember8,2015,andpartialyrepealedonJuly1,2019,whereanindividual

APENDIXIVTAXATIONANDFOREIGNEXCHANGE

–IV-1–

---

holdsthesharesofalistedcompanyobtainedfromthepublicoferingandthestockmarketfor

morethanoneyear,thedividendandbonusincomeshalbetemporarilyexemptedfromindividual

incometax.Whereanindividualobtainsharesofalistedcompanyfromthepublicoferingand

thestockmarket,iftheholdingperiodiswithinonemonth(inclusive),thedividendandbonus

incomeshalbeincludedinthetaxableincomeinful;iftheholdingperiodismorethanone

monthbutlesthanoneyear(inclusive),thedividendandbonusincomeshalbeincludedinthe

taxableincomeatherateof50%;theaforesaidincomeshalbesubjectoindividualincometax

atauniformrateof20%.

AcordingtotheArangementbetwentheMainlandChinandtheHongKongSpecial

AdministrativeRegionfortheAvoidanceofDoubleTaxationandthePreventionofFiscalEvasion

withrespectoTaxesonIncome(《内地和香港特别行政区关于对所得避免双重征税和防止偷漏税

的安排》)(the“Arangement”)efectiveonAugust21,2006,thePRCgovernmentmayimpose

taxondividendspaidbyaPRCcompanytoaHongKongresident(includingnaturalpersonand

legalpersonentity),butsuchtaxshalnotexced10%ofthetotalamountofdividendspayable.If

aHongKongresidentdirectlyholds25%ormoreofthequityinterestsinaPRCcompany,such

taxshalnotexced5%ofthetotalamountofdividendspayablebythePRCcompany.TheFifth

ProtocoltotheArangementbetwentheMainlandChinandtheHongKongSpecial

AdministrativeRegionfortheAvoidanceofDoubleTaxationandthePreventionofFiscalEvasion

withRespectoTaxesonIncome(《〈内地和香港特别行政区关于对所得避免双重征税和防止偷漏

税的安排〉第五议定书》)(the“FifthProtocoltotheArangement”)efectiveonDecember6,

2019adsacriteriaforthequalificationofentitlementoenjoytreatybenefits.Althoughthere

maybeotherprovisionsundertheArangement,thetreatybenefitsunderthecriteriashalnotbe

grantedinthecircumstancewhererelevantreatybenefits,aftertakingintoacountalrelevant

factsandconditions,arereasonablydemedtobeoneofthemainpurposesforthearangementor

transactionswhichwilbringanydirectorindirectbenefitsunderthisArangement,exceptwhen

thegrantofbenefitsundersuchcircumstanceisconsistentwithrelevantobjectiveandgoalunder

theArangement.Inadition,theaplicationofthedividendclauseoftaxtreatiesisubjectothe

requirementsofPRCtaxlawandregulation,suchastheNoticeoftheStateAdministrationof

TaxationontheIsuesConcerningtheAplicationoftheDividendClausesofTaxTreaties(《国家

税务总局关于执行税收协定股息条款有关问题的通知》).

EnterpriseInvestors

AcordingtotheEnterpriseIncomeTaxLawofthePRC(《中华人民共和国企业所得税法》)

(the“EITLaw”)promulgatedbytheSCNPConMarch16,2007,andlastamendedand

implementedonDecember29,2018,andtheImplementationRulesoftheEnterpriseIncomeTax

LawofthePRC(《中华人民共和国企业所得税法实施条例》)(the“ImplementationRules”)

promulgatedbytheStateCouncilonDecember6,2007,lastamendedonDecember6,2024and

implementedonJanuary20,2025,anon-residententerpriseisgeneralysubjectoa10%EITon

APENDIXIVTAXATIONANDFOREIGNEXCHANGE

–IV-2–

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PRC-sourcedincome,includingdividendsandbonusreceivedfromaPRCresidententerprisethat

isuesandlistsharesinHongKong,ifsuchnon-residententerprisedoesnothavean

establishmentorplaceofbusinesinthePRCorhasanestablishmentorplaceofbusinesinthe

PRCbuthePRC-sourcedincomeisnotactualyconectedwithsuchestablishmentorplaceof

businesinthePRC.Theaforesaidincometaxpayablebynon-residententerpriseshalbe

witheldatsource,andthepayershalbethewitholdingagent.Thetaxshalbewitheldbythe

witholdingagentfromthepaymentorduepaymenteverytimeitispaidordue.

TheNoticeoftheStateTaxationAdministrationontheIsuesConcerningWitholdingthe

EnterpriseIncomeTaxontheDividendsPaidbyChineseResidentEnterprisestoH-ShareHolders

WhichAreOverseasNon-residentEnterprises(《国家税务总局关于中国居民企业向境外H股非居

民企业股东派发股息代扣代缴企业所得税有关问题的通知》)isuedandimplementedbytheSAT

onNovember6,2008,furtherclarifiedthataPRCresidententerpriseisrequiredtowitholdEIT

atauniformrateof10%ondividendsof2008andonwardsthatitdistributestoH-shareholders

whichareoverseasnon-residententerprises.TheReplyontheColectionofEnterpriseIncomeTax

onDividendsReceivedbyNon-residentEnterprisesfromHoldingBSharesandOtherShares(《关

于非居民企业取得B股等股票股息征收企业所得税问题的批复》)isuedandimplementedbythe

SATonJuly24,2009,furtherprovidesthatPRC-residententerpriseslistedwithinoroutsidethe

PRCbyisuingstocks(includingAshares,Bsharesandoverseashares)mustwitholdEITata

uniformrateof10%ondividendsof2008andonwardsthatitdistributestonon-residententerprise

shareholders.Non-residententerpriseshareholdershalfolowrelevantprovisionsexecutedbytax

treatywheretheynedtoenjoythetreatmentoftaxtreaty.AcordingtotheArangement,thePRC

governmentmayimposetaxondividendspaidbyaPRCcompanytoaHongKongresident

(includingnaturalpersonandlegalpersonentity),butsuchtaxshalnotexced10%ofthetotal

amountofdividendspayable.IfaHongKongresidentdirectlyholds25%ormoreofthequity

interestsinaPRCcompany,suchtaxshalnotexced5%ofthetotalamountofdividendspayable

bythePRCcompany.

TheFifthProtocoltotheArangementadsacriteriaforthequalificationofentitlemento

enjoytreatybenefits.AlthoughtheremaybeotherprovisionsundertheArangement,thetreaty

benefitsunderthecriteriashalnotbegrantedinthecircumstancewhererelevantreatybenefits,

aftertakingintoacountalrelevantfactsandconditions,arereasonablydemedtobeoneofthe

mainpurposesforthearangementortransactionswhichwilbringanydirectorindirectbenefits

underthisArangement,exceptwhenthegrantofbenefitsundersuchcircumstanceisconsistent

withrelevantobjectiveandgoalundertheArangement.Inadition,theaplicationofthe

dividendclauseoftaxtreatiesisubjectotherequirementsofPRCtaxlawandregulation,such

astheNoticeoftheStateAdministrationofTaxationontheIsuesConcerningtheAplicationof

theDividendClausesofTaxTreaties(《国家税务总局关于执行税收协定股息条款有关问题的通

知》).

APENDIXIVTAXATIONANDFOREIGNEXCHANGE

–IV-3–

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TaxTreaties

Non-residentinvestorsresidingincountrieswhichaventeredintotreatiesforthe

avoidanceofdoubletaxationwiththePRCoresidinginHongKongorMacaumightbentitled

toawitholdingtaxreliefonthedividendsreceivedfromPRCcompanies.ThePRCcurentlyhas

enteredintotreaties/arangementsfortheavoidanceofdoubletaxationwithanumberofcountries

andregionsincludingHongKong,Macau,Australia,Canada,France,Germany,Japan,Malaysia,

theNetherlands,Singapore,theUnitedKingdom,theUnitedStatesandetc.Non-PRCresident

enterprisesentitledtopreferentialtaxratesinacordancewiththerelevantaxationtreatiesor

arangementsarerequiredtoaplytothePRCtaxauthoritiesforarefundofthewitholdingtax

inexcesoftheagredtaxrate,andtherefundpaymentisubjectoaprovalbythePRCtax

authorities.

TaxonGainsfromShareTransfers

IncomeTax

IndividualInvestors

UndertheITLawanditsImplementationRules,individualsaresubjectoindividualincome

taxatarateof20%ongainsrealizedonthesaleofequityinterestsinPRCresidententerprises.

AcordingtotheCircularonContinuingtheTemporaryExemptionofIndividualIncomeTax

onGainsfromShareTransfersbyIndividuals(《关于个人转让股票所得继续暂免征收个人所得税

的通知》),whichwaspromulgatedbytheMOFandtheSATandefectiveonMarch30,1998,

fromJanuary1,1997,incomeofindividualsfromthetransferofsharesinlistedcompanies

continuestobetemporarilyexemptedfromindividualincometax.TheCircularonRelatedIsues

onLevyingIndividualIncomeTaxovertheIncomeReceivedbyIndividualsfromtheTransferof

RestrictedSharesofListedCompanies(《关于个人转让上市公司限售股所得征收个人所得税有关

问题的通知》)jointlyisuedbytheMOF,theSTAandtheCSRConDecember31,2009and

efectiveonJanuary1,2010,statesthatincomederivedbyindividualsfromtransferofsharesof

listedontheShanghaiStockExchangeandtheShenzhenStockExchangeshalcontinuetobe

exemptedfromindividualincometax,exceptfortherelevantshareswhicharesubjectosales

restriction(asdefinedintheSuplementaryNoticeonRelatedIsuesonLevyingIndividual

IncomeTaxovertheIncomeReceivedbyIndividualsfromtheTransferofRestrictedSharesof

ListedCompanies(《关于个人转让上市公司限售股所得征收个人所得税有关问题的补充通知》)

jointlyisuedbytheabovethredepartmentsonNovember10,2010.AsoftheLatestPracticable

Date,theaforesaidprovisionshasnotexpreslyspecifiedwhetherindividualincometaxwouldbe

leviedonthetransferofsharesofPRCresidententerpriseslistedonoverseastockexchangesby

non-PRCresidentindividuals.

APENDIXIVTAXATIONANDFOREIGNEXCHANGE

–IV-4–

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EnterpriseInvestors

UndertheEITLawanditsImplementationRules,anon-residententerpriseisgeneraly

subjectoa10%EITonPRC-sourcedincome,includingainsderivedfromthedisposalofshares

inaPRCresidententerprise,ifsuchnon-residententerprisedoesnothaveanestablishmentor

placeofbusinesinthePRCorhasanestablishmentorplaceofbusinesinthePRCbuthe

PRC-sourcedincomeisnotactualyconectedwithsuchestablishmentorplaceofbusinesinthe

PRC;theaforesaidincometaxpayablebynon-residententerpriseshalbewitheldatsource,and

thepayershalbethewitholdingagent.Thetaxshalbewitheldbythewitholdingagentfrom

thepaymentorduepaymenteverytimeitispaidordue.Suchtaxmaybereducedorexempted

underelevantaxtreatiesoragrementsfortheavoidanceofdoubletaxation.

StampDuty

AcordingtotheStampDutyLawofthePRC(《中华人民共和国印花税法》),whichwas

promulgatedbytheSCNPConJune10,2021andimplementedonJuly1,2022,PRCstampduty

isaplicabletothentitiesandindividualsthatconcludetaxablevouchersorconductsecurities

tradingwithintheteritoryofthePRC,andthentitiesandindividualsoutsidetheteritoryofthe

PRCthatconcludetaxablevouchersthatareusedinsideChina.Therefore,therequirementsofthe

stampdutyimposedonthetransferofsharesofPRClistedcompanieshalnotaplytothe

acquisitionandisposalofHSharesbynon-PRCinvestorsoutsidethePRC.

EstateDuty

AsoftheLatestPracticableDate,noestatedutyhasbenleviedbythePRCgovernment

underthePRClaws.

MAJORTAXATIONOFOURCOMPANYINTHEPRC

EnterpriseIncomeTax

AcordingtotheEITLawandtheImplementationRulesoftheEITLaw,theEITrateshal

be25%.Enterprisesareclasifiedintoresidententerprisesandnon-residententerprises.Aresident

enterpriseshalpayEITonitsincomederivedfromsourceswithinoroutsideChina,andtheEIT

rateis25%.Ifanon-residententerprisehasanestablishmentorplaceofbusinesinthePRC,it

shalpayEITatarateof25%ontheincomederivedfromChinandontheincomeitearns

outsideChinabutisactualyconectedwithsuchestablishmentorplaceofbusines,andtheEIT

rateshalbe25%.

APENDIXIVTAXATIONANDFOREIGNEXCHANGE

–IV-5–

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Value-adedTax(“VAT”)

AcordingtotheProvisionalRegulationsonValue-adedTaxofthePRC(《中华人民共和国

增值税暂行条例》)promulgatedbytheStateCouncilonDecember13,1993,lastamendedand

implementedonNovember19,2017,andtheDetailedRulesfortheImplementationofthe

ProvisionalRegulationsonValue-adedTaxofthePRC(《中华人民共和国增值税暂行条例实施细

则》)promulgatedbytheMOFonDecember15,1993,lastamendedonOctober28,2011and

implementedonNovember1,2011,altaxpayersinthePRCengaginginthesaleofgods,the

provisionofprocesing,repairsandreplacementservices,selingservices,intangibleasetsand

realestateandtheimportationofgodswithintheteritoryofthePRCarerequiredtopayVAT.

Unlesotherwisespecified,forthesaleofgods,theprovisionofservices,theprovisionof

tangiblepersonalpropertyleasingservicesortheimportationofgods,thetaxrateshalbe

17.0%.

TheNoticeoftheMinistryofFinanceandtheStateAdministrationofTaxationonthe

AdjustmentoValue-adedTaxRates(《财政部、国家税务总局关于调整增值税率的通知》)

promulgatedbytheMOFandtheSATonApril4,2018,andimplementedonMay1,2018,

adjustedtheaplicabletaxrateforVAT.TheVATratesof17.0%and11.0%aplicabletothe

taxpayerswhohaveVATtaxablesalesactivitiesandimportedgodsareadjustedto16.0%and

10.0%,respectively.

AcordingtotheAnouncementonRelevantPoliciesforDepeningValue-AdedTax

Reform(《关于深化增值税改革有关政策的公告》)promulgatedbytheMOF,theSATandthe

GeneralAdministrationofCustomsonMarch20,2019andimplementedonApril1,2019,the

VATratesof16%and10%forthesaleofgodsandtheimportationofgodsareadjustedto13%

and9%,respectively.

FOREIGNEXCHANGE

AcordingtotheForeignExchangeAdministrationRegulationsofthePRC(《中华人民共和

国外汇管理条例》)promulgatedbytheStateCouncilonJanuary29,1996andlastamendedand

implementedonAugust5,2008,paymentsofcurentacountitems,suchasprofitdistributions,

interestpaymentsandtradeandservicerelatedforeignexchangetransactions,canbefrely

convertibleintoandmadeinforeigncurencieswithoutprioraprovalfromtheState

AdministrationofForeignExchange,bycomplyingwithcertainproceduralrequirements.By

contrast,prioraprovalfromoregistrationwiththeSAFEoritslocalbranchesisrequiredwhere

RenminbistobeconvertedintoforeigncurencyandremitedoutofChinatopaycapitalacount

items,suchasdirectinvestments,repaymentoforeigncurency-denominatedloans,repatriation

ofinvestmentsandinvestmentsinsecuritiesoutsideofChina.

APENDIXIVTAXATIONANDFOREIGNEXCHANGE

–IV-6–

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AcordingtotheCircularoftheStateAdministrationofForeignExchangeonFurther

SimplifyingandImprovingForeignExchangeAdministrationPoliciesforDirectInvestment(《国

家外汇管理局关于进一步简化和改进直接投资外汇管理政策的通知》)promulgatedbytheSAFE

onFebruary13,2015,implementedonJune1,2015andpartialyrepealedonDecember30,2019,

thebankinsteadofSAFEcandirectlyhandletheforeignexchangeregistrationandaprovalunder

domesticandforeigndirectinvestmentwhileSAFEanditsbranchesindirectlysupervisethe

foreignexchangeregistrationandaprovalunderdirectinvestmenthroughthebank.

TheCircularoftheStateAdministrationofForeignExchangeonReformingtheManagement

MethodfortheSetlementofForeignExchangeCapitalofForeign-investedEnterprises(《国家外

汇管理局关于改革外商投资企业外汇资本金结汇管理方式的通知》)(the“Circular19”)isuedby

theSAFEonMach30,2015andlastamendedandimplementedonMarch23,2023,alows

foreign-investedenterprisestomakequityinvestmentsbyusingRMBfundsconvertedfrom

foreignexchangecapital.UndertheCircular19,theforeignexchangecapitalinthecapitalacount

oforeign-investedenterprisesupontheconfirmationofrightsandinterestsofmonetary

contributionbythebranchoficeoftheStateAdministrationofForeignExchange(orthe

bok-entryregistrationofmonetarycontributionbythebanks)canbesetledathebanksbasedon

theactualoperationedsofthenterprises.Theproportionofdiscretionarysetlementoforeign

exchangecapitaloforeign-investedenterprisesiscurently100%.SAFEcanadjustsuch

proportioninduetimebasedonthecircumstancesoftheinternationalbalanceofpayments.In

adition,Circular19andtheCircularoftheStateAdministrationofForeignExchangeon

ReformingandRegulatingPoliciesontheControloverForeignExchangeSetlementofCapital

Acounts(《国家外汇管理局关于改革和规范资本项目结汇管理政策的通知》)(the“Circular16”)

isuedbytheSAFEonJune9,2016,lastamendedandimplementedonDecember4,2023,

providethatforeign-investedenterpriseshalnotuseRMBfundsconvertedfromitsforeign

exchangecapitalforexpendituresbeyonditsbusinescopeorprohibitedbynationalawsand

regulations,securitiesinvestmentorotherinvestmentandwealthmanagementotherthanbanks’

principalguarantedproducts,grantingloanstonon-afiliatedenterprises,saveasthecases

expreslypermitedinthebusinescopeorconstructingorpurchasingnon-self-userealestate

(excludingrealestatedeveloper).TheCircularoftheStateAdministrationofForeignExchangeon

FurtherDepeningReformstoFacilitateCros-borderTradeandInvestment(HuiFa[2023]No.

28)(《国家外汇管理局关于进一步深化改革促进跨境贸易投资便利化的通知》(汇发[2023]28号)

isuedandimplementedbytheSAFEonDecember4,2023furtherupdatestheCircularNo.16

andprovidesthatheuseofcapitalfundsofnon-financialenterprises,foreignexchangeincome

underforeigndebtandRMBfundsderivedfromforeignexchangesetlementshalfolowthe

principleoftruthfulnesandself-use,and1)itshalnotbeusedirectlyorindirectlyfor

expendituresprohibitedbynationalawsandregulations;2)unlesotherwisexpreslyprovided,

itshalnotbeusedirectlyorindirectlyforinvestmentinsecuritiesorotherinvestmentand

wealthmanagement(exceptforwealthmanagementproductsandstructuredepositswithrisk

ratingsofnothigherthanLevel2);3)itshalnotbeusedfortheisuanceofloansto

APENDIXIVTAXATIONANDFOREIGNEXCHANGE

–IV-7–

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non-afiliatedenterprises(exceptforthosexpreslypermitedinthescopeofbusinesandthe

fourareasofLingangNewAreaofChina(Shanghai)PilotFreTradeZone,GuangzhouNansha

NewAreaofChina(Guangdong)PilotFreTradeZone,YangpuEconomicDevelopmentZoneof

China(Hainan)FreTradePortandBeilunDistrictofNingboCity,ZhejiangProvince);4)itshal

notbeusedforthepurchaseofnon-self-useresidentialproperties(exceptforenterprisesengaged

inrealestatedevelopmentandoperationandrealestateleasingandoperation).

OnOctober23,2019,theSAFEreleasedtheNoticeoftheStateAdministrationofForeign

ExchangeonFurtherPromotingtheFacilitationofCros-borderTradeandInvestment(《国家外汇

管理局关于进一步促进跨境贸易投资便利化的通知》),whichwaslastamendedandimplemented

onDecember4,2023,canceledtherestrictionsonthedomesticequityinvestmentby

non-investmentforeign-investedenterpriseswiththeircapitalfundsandalowednon-investment

foreign-investedenterprisestomakedomesticequityinvestmentwiththeircapitalfundsin

acordancewiththelawonthepremisethatheNegativeListisnotviolatedandtheprojects

investedtherebyinChinaregenuineandcompliant.

AcordingtotheCircularoftheStateAdministrationofForeignExchangeonOptimizing

ForeignExchangeAdministrationtoSuportheDevelopmentofForeign-relatedBusines(《国家

外汇管理局关于优化外汇管理支持涉外业务发展的通知》)isuedandimplementedbytheSAFE

onApril10,2020,eligiblenterprisesarealowedtomakedomesticpaymentsbyusingtheir

capital,foreigncreditsandtheincomeundercapitalacountsofoverseaslisting,withnonedto

providethevidentiarymaterialsconcerningauthenticityofsuchcapitalforbanksinadvance,

providedthatheircapitaluseshalbeauthenticandinlinewithprovisions,andconformtothe

prevailingadministrativeregulationsontheuseofincomeundercapitalacounts.Theconcerned

bankshalfolowtheprincipleofprudentialbusinesdevelopmentomanageandcontrolrelevant

businesrisks,andconductrandomchecksonthefacilitationofpaymentfromincomeunder

capitalacountsafterwardsinacordancewithrelevantrequirements.

AcordingtotheNoticeoftheStateAdministrationofForeignExchangeonIsues

ConcerningtheForeignExchangeAdministrationofOverseasListing(《国家外汇管理局关于境外

上市外汇管理有关问题的通知》)promulgatedbytheSAFEonDecember26,2014,adomestic

companyshal,within15businesdaysfromthedateofthendofitsoverseaslistingisuance,

registertheoverseaslistingwiththelocalbranchoficeoftheStateAdministrationofForeign

Exchangeatheplaceofitsestablishment.Thefundsraisedbythedomesticompanyfrom

overseaslistingmayberepatriatedorbedepositedoverseas.Theuseofsuchfundshalbe

consistentwiththoselistedintheprospectusdocumentationforsharesortheprospectus

documentationforcorporatebonds,circularstoshareholders,resolutionsoftheBoardorthe

generalmetingsandotherpublicdisclosuredocuments.

APENDIXIVTAXATIONANDFOREIGNEXCHANGE

–IV-8–

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ThisApendixsumarizescertainaspectsofPRClawsandregulationswhicharerelevanto

ourCompany’soperationsandbusines.LawsandregulationsrelatingtotaxationinthePRCare

discusedseparatelyin“ApendixIV—TaxationandForeignExchange”tothisdocument.This

ApendixalsocontainsasumaryoflawsandregulatoryprovisionsoftheCompanyLaw.The

principalobjectiveofthisumaryistoprovidepotentialinvestorswithanoverviewofthe

principalawsandregulatoryprovisionsaplicabletourCompany.Thisumaryisnotintended

toincludealdatawhichisimportantothepotentialinvestors.Foradiscusionoflawsand

regulationswhicharerelevantourCompany’sbusines,se“RegulatoryOverview”inthis

document.

ThePRCLegalSystem

ThePRClegalsystemisbasedontheConstitutionofthePRC(《中华人民共和国宪法》)(the

“Constitution”),andismadeupofwritenlaws,administrativeregulations,localregulations,

autonomousregulationsandseparateregulations,rulesandregulationsofdepartmentsoftheState

Council,rulesandregulationsoflocalgovernments,lawsofspecialadministrativeregionsand

internationaltreatiesandotheregulatorydocumentsignedbythePRCgovernment.Court

decisionsdonotconstitutebindingprecedents,althoughtheyareusedforthepurposesofjudicial

referenceandguidance.

AcordingtotheConstitutionandtheLegislationLawofthePRC(《中华人民共和国立法

法》)(the“LegislationLaw”),whichwaslastamendedbytheNPConMarch13,2023and

becamefectiveonMarch15,2023,theNPCandtheSCNPCarempoweredtoexercisethe

legislativepoweroftheState.TheNPChasthepowertoformulateandamendbasiclaws

governingcriminalandcivilmaters,stateorgansandothermaters.TheSCNPCisempoweredto

formulateandamendlawsotherthanthoserequiredtobenactedbytheNPCandtosuplement

andamendanypartsoflawsenactedbytheNPCduringtheadjournmentoftheNPC,provided

suchsuplementsandamendmentsarenotinconflictwiththebasicprinciplesofsuchlaws.

TheStateCouncilisthehighestorganofstateadministrationandhasthepowertoformulate

administrativeregulationsbasedontheConstitutionandlaws.Thepeople’scongresesof

provinces,autonomousregionsandmunicipalitiesdirectlyundertheCentralGovernmentandtheir

respectivestandingcomitesmayformulatelocalregulationsbasedonthespecific

circumstancesandactualnedsoftheirespectiveadministrativeareas,providedthatsuchlocal

regulationsdonotcontraveneanyprovisionoftheConstitution,lawsoradministrativeregulations.

Thepeople’scongresesofcitiesdividedintodistrictsandtheirstandingcomitesmay

formulatelocalregulationsonmatersuchasurbanandruralconstructionandmanagement,

environmentalprotectionandhistoricalandculturalprotectionbasedonthespecificircumstances

andactualnedsofsuchcities,providedthatsuchlocalregulationsdonotcontraveneany

provisionoftheConstitution,laws,administrativeregulationsandlocalregulationsofsuch

APENDIXVSUMARYOFPRINCIPALEGALANDREGULATORYPROVISIONS

–V-1–

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provincesorautonomousregions.Wherelawshaveotherstipulationsonmatersoflocal

regulationsformulatedbycitiesdividedintodistricts,suchstipulationshalprevail.Thelocal

regulationsofcitiesdividedintodistrictsorautonomousregionshalbeimplementedafter

aproval.

Thestandingcomitesofthepeople’scongresesofprovincesorautonomousregionshal

examinethelegalityoflocalregulationsubmitedforaproval,andsuchaprovalshalbe

grantedwithinfourmonthsiftheyarenotinconflictwiththeConstitution,laws,administrative

regulationsandlocalregulationsoftheirespectiveprovincesorautonomousregions.People’s

congresesofnationalautonomousareashavethepowertoenactautonomousregulationsand

separateregulationsinthelightofthepolitical,economicandculturalcharacteristicsofthe

nationality(nationalities)intheareasconcerned.TheministriesandcomisionsoftheState

Council,PBOC,NationalAuditOficeandinstitutionswithadministrativefunctionsdirectlyunder

theStateCouncilmayformulaterulesandregulationswithinthejurisdictionoftheirespective

departmentsbasedonthelawsandtheadministrativeregulations,decisionsandrulingsofthe

StateCouncil.

TheConstitutionhasupremelegalauthorityandnolaws,administrativeregulations,local

regulations,autonomousregulationsandseparateregulationsorulesmaycontravenethe

Constitution.Theauthorityoflawsisgreaterthanthatofadministrativeregulations,local

regulationsandrules.Theauthorityofadministrativeregulationsisgreaterthanthatoflocal

regulationsandrules.Theauthorityoftherulesenactedbythepeople’sgovernmentsofthe

provincesandautonomousregionsisgreaterthanthatoftherulesenactedbythepeople’s

governmentsofthecitiesdividedintodistrictswithintheirespectiveadministrativeregions.

TheNPChasthepowertoalteroranulanyinapropriatelawsenactedbytheSCNPC,and

toanulanyautonomousregulationsandseparateregulationswhichavebenaprovedbythe

SCNPCbutcontravenetheConstitutionandtheLegislationLaw;theSCNPChasthepowerto

anuladministrativeregulationsthatcontravenetheConstitutionandlaws,toanulocal

regulationsthatcontravenetheConstitution,lawsandadministrativeregulations,andtoanul

autonomousregulationsandseparateregulationswhichavebenaprovedbythestanding

comitesofthepeople’scongresesoftherelevantprovinces,autonomousregionsor

municipalitiesdirectlyundertheCentralGovernmentbutcontravenetheConstitutionandthe

LegislationLaw;theStateCouncilhasthepowertoalteroranulanyinapropriateministerial

rulesandrulesoflocalgovernments;thepeople’scongresesofprovinces,autonomousregions

andmunicipalitiesdirectlyundertheCentralGovernmenthavethepowertoalteroranulany

inapropriatelocalregulationsenactedoraprovedbytheirespectivestandingcomites;the

standingcomitesofthelocalpeople’scongreseshavethepowertoanulinapropriaterules

APENDIXVSUMARYOFPRINCIPALEGALANDREGULATORYPROVISIONS

–V-2–

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enactedbythepeople’sgovernmentsathecorespondinglevel;thepeople’sgovernmentsof

provincesandautonomousregionshavethepowertoalteroranulanyinapropriaterulesenacted

bythepeople’sgovernmentsatalowerlevel.

AcordingtotheConstitutionandtheLegislationLaw,thepowertointerpretlawsisvested

intheSCNPC.AcordingtotheDecisionoftheSCNPCRegardingtheStrengtheningof

InterpretationofLaws(《全国人民代表大会常务委员会关于加强法律解释工作的决议》)pased

bytheSCNPConJune10,1981andbecomingefectiveonthesamedate,isuesrelatedtothe

furtherclarificationorsuplementoflawsandecreshalbeinterpretedorprovidedbythe

SCNPCthroughdecres,isuesrelatedtothespecificaplicationoflawsandecresinacourt

trialshalbeinterpretedbytheSupremePeople’sCourt,andisuesrelatedtothespecific

aplicationoflawsandecresintheprocuratorialworkshalbeinterpretedbytheSupreme

People’sProcuratorate.IftherearediferencesinprincipleintheinterpretationoftheSupreme

People’scourtandtheSupremePeople’sProcuratorate,theyshalbesubmitedtotheSCNPCfor

interpretationordecision,andisuesrelatedtothespecificaplicationoflawsandecresin

areasunrelatedtojudicialandprocuratorialworkshalbeinterpretedbytheStateCouncilandthe

competentauthorities.

Wherethescopeoflocalregulationsnedstobefurtherdefinedoraditionalstipulations

nedtobemade,thestandingcomitesofthepeople’scongresesofprovinces,autonomous

regionsandmunicipalitiesdirectlyundertheCentralGovernmentwhichavenactedthese

regulationshalprovidetheinterpretationsormakethestipulations.Interpretationofquestions

involvingthespecificaplicationoflocalregulationshalbeprovidedbythecompetent

departmentsofthepeople’sgovernmentsofprovinces,autonomousregionsandmunicipalities

directlyundertheCentralGovernment.

ThePRCJudicialSystem

AcordingtotheConstitutionandtheLawofOrganizationofthePeople’sCourtsofthePRC

(《中华人民共和国人民法院组织法》)lastamendedbytheSCNPConOctober26,2018and

becomingefectiveonJanuary1,2019,thepeople’scourtsaremadeupoftheSupremePeople’s

Court,thelocalpeople’scourts,andspecialpeople’scourts.Thelocalpeople’scourtsaredivided

intothrelevels,namelythebasicpeople’scourts,theintermediatepeople’scourtsandthehigher

people’scourts.Thebasicpeople’scourtsmaysetupcertainpeople’stribunalsbasedonthestatus

oftheregion,populationandcases.TheSupremePeople’sCourtshalbethehighestjudicial

organ.TheSupremePeople’sCourtshalsupervisethejudicialworkbythelocalpeople’scourtsat

alevelsandbythespecialpeople’scourts.Thepeople’scourtsatahigherlevelshalsupervise

thejudicialworkofthepeople’scourtsatlowerlevels.

APENDIXVSUMARYOFPRINCIPALEGALANDREGULATORYPROVISIONS

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AcordingtotheConstitutionandtheLawofOrganizationofthePeople’sProcuratorateof

thePRC(《中华人民共和国人民检察院组织法》)lastamendedbytheSCNPConOctober26,2018

andbecomingefectiveonJanuary1,2019,thepeople’sprocuratoratesarethelawsupervision

organsofthestate.TheSupremePeople’sProcuratorateshalbethehighestprocuratorialorgan.

TheSupremePeople’sProcuratorateshaldirectheworkofthelocalpeople’sprocuratoratesatal

levelsandofthespecialpeople’sprocuratorates;thepeople’sprocuratoratesathigherlevelshal

directheworkofthoseatlowerlevels.

Thepeople’scourtsemployatwo-tierapelatesystem,andjudgmentsorulingsofthe

secondinstanceathepeople’scourtsarefinal.Apartymayapealagainsthejudgmentoruling

ofthefirstinstanceofalocalpeople’scourts.Thepeople’sprocuratoratemaypresentaprotesto

thepeople’scourtsathenexthigherlevelinacordancewiththeprocedurestipulatedbythe

laws.Intheabsenceofanyapealbythepartiesandanyprotestbythepeople’sprocuratorate

withinthestipulatedperiod,thejudgmentsorulingsofthepeople’scourtsarefinal.Judgmentsor

rulingsofthesecondinstanceoftheintermediatepeople’scourts,thehigherpeople’scourtsand

theSupremePeople’sCourtandthoseofthefirstinstanceoftheSupremePeople’sCourtarefinal.

However,iftheSupremePeople’sCourtorthepeople’scourtathehigherlevelfindsanydefinite

erorsinalegalyefectivefinaljudgmentorulingofthepeople’scourtatalowerlevel,orifthe

chiefjudgeofapeople’scourtatanylevelfindsanydefiniterorsinalegalyefectivefinal

judgmentorulingofsuchcourt,thecasecanberetriedacordingtojudicialsupervision

procedures.

TheCivilProcedureLawofthePRC(《中华人民共和国民事诉讼法》)(the“CivilProcedure

Law”),lastamendedbytheSCNPConSeptember1,2023andbecomingefectiveonJanuary1,

2024,setsforththerequirementsforinstitutingacivilaction,thejurisdictionofthepeople’s

courts,theprocedurestobefolowedforconductingacivilactionandtheproceduresfor

enforcementofaciviljudgmentororder.AlpartiestoacivilactionconductedwithinthePRC

mustcomplywiththeCivilProcedureLaw.Civilcasesaregeneralyheardbythecourtswherethe

defendantsarelocated.Thecourtofjurisdictioninacivilactionmaybechosenbythewriten

agrementbetwentheparties,providedthathecourtislocatedataplacethathasdirect

conectionwiththedispute,suchastheplaintif’sorthedefendant’splaceofdomicile,theplace

wherethecontractisperformedorsignedortheobjectoftheactionislocated.However,such

choicecanotbeinconflictwiththeregulationsofgradejurisdictionsandexclusivejurisdictions

inanycase.

Aforeignindividual,apersonwithoutnationality,aforeignenterpriseandaforeign

organizationthatinstituteorespondtoprocedingsinapeople’scourtaregiventhesame

litigationrightsandobligationsasaPRCcitizen,alegalpersonandotherorganizations.Shoulda

foreigncourtlimithecivilitigationrightsofPRCcitizens,legalpersonsandotherorganizations,

anypeople’scourtshalaplythesamelimitationstothecitizens,enterprisesandorganizationsof

APENDIXVSUMARYOFPRINCIPALEGALANDREGULATORYPROVISIONS

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suchforeigncountry.Aforeignindividual,apersonwithoutnationality,aforeignenterpriseanda

foreignorganizationmustengageaPRClawyerincasehe/sheoritnedstoengagealawyerfor

thepurposeofinitiatingactionsordefendingagainstlitigationsatapeople’scourt.Inacordance

withtheinternationaltreatiestowhichthePRCisasignatoryoraparticipantoracordingtothe

principleofreciprocity,apeople’scourtandaforeigncourtmayrequesteachothertoserve

documents,conductinvestigation,colectevidenceandconductotheractionsonitsbehalf.A

people’scourtshalnotacomodateanyrequestmadebyaforeigncourtwhichwilresultinthe

violationofsovereignty,securityorsocialandpublicinterestsofthePRC.

Alpartiesmustcomplywithlegalyefectiveciviljudgmentsandrulings.Ifanypartytoa

civilactionrefusestocomplywithajudgmentorordermadebyapeople’scourtoranaward

madebyanarbitrationtribunal,theotherpartymayaplytothepeople’scourtforenforcement

withintwoyears.Suspensionordisruptionofthetimelimitforaplyingforsuchenforcement

shalcomplywiththeprovisionsoftheaplicablelawconcerningthesuspensionordisruptionof

thetime-baringofactions.

Whenapartyapliestoapeople’scourtforenforcinganefectivejudgmentorulingbya

people’scourtagainstapartywhoisnotlocatedwithintheteritoryofthePRCorwhoseproperty

isnotwithinthePRC,thepartymayaplytoaforeigncourtwithproperjurisdictionfor

recognitionandenforcementofthejudgmentoruling.Aforeignjudgmentorulingmayalsobe

recognizedandenforcedbythepeople’scourtacordingtothePRCenforcementproceduresifthe

PRChasenteredinto,oracededto,aninternationaltreatywiththerelevantforeigncountry,

whichprovidesforsuchrecognitionandenforcement,orifthejudgmentorulingsatisfiesthe

court’sexaminationacordingtotheprincipleofreciprocity,unlesamongotherexceptions,the

people’scourtfindsthatherecognitionorenforcementofsuchjudgmentorulingwilresultina

violationofthebasicprinciplesofthePRC,itsovereigntyorsecurity,orforeasonsofsocial

andpublicinterests.

TheCompanyLaw,OverseasListingTrialMeasuresandGuidelinesforArticlesof

AsociationofListedCompanies

AjointstocklimitedcompanyestablishedinthePRCsekingalistingontheHongKong

StockExchangeismainlysubjectothefolowinglawsandregulationsofthePRC.

TheCompanyLawaslastamendedbytheSCNPConDecember29,2023andcameinto

efectonJuly1,2024.

APENDIXVSUMARYOFPRINCIPALEGALANDREGULATORYPROVISIONS

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TheOverseasListingTrialMeasuresanditsfiveinterpretativeguidelines,promulgatedby

theCSRConFebruary17,2023andbecomingefectiveonMarch31,2023,areaplicableto

companieswithinthePRCthatdirectlyorindirectlyofersecuritiesoverseasorlistheirsecurities

overseas.

AcordingtotheOverseasListingTrialMeasuresanditsinterpretativeguidelines,wherea

domesticompanydirectlyoferingandlistingsecuritiesoverseas,itshalformulateitsarticlesof

asociationinlinewiththeGuidelinesforArticlesofAsociationofListedCompanies(《上市公司

章程指引》)(the“GuidelinesforArticlesofAsociation”)whichwerelastamendedbytheCSRC

onMarch28,2025andbecamefectiveonthesamedate.

SetoutbelowisasumaryofthemajorprovisionsoftheCompanyLaw,theOverseas

ListingTrialMeasuresandtheGuidelinesforArticlesofAsociationwhichareaplicabletour

Company.

GeneralProvisions

“Ajointstocklimitedcompany”meansacorporatelegalpersonincorporatedunderthe

CompanyLaw,whoseregisteredcapitalisdividedintoshares.Theliabilityofitshareholdersis

limitedtothextentofthesharesheldbythemandtheliabilityofacompanyislimitedtotheful

valueofalthepropertyownedbyit.

Acompanyshalconductitsbusinesinacordancewithlawsandregulations,observesocial

ethicsandbusinesethics,actingodfaith,andbesubjectogovernmentandpublicoversight.It

mayinvestinotherenterprises.Whereanylawprovidesthatacompanyshalnotbecomeacapital

contributorwhohasthejointliabilitiesasociatedwiththedebtsoftheinvestedenterprises,such

provisionshalprevail.

Incorporation

Ajointstocklimitedcompanymaybeincorporatedbypromotionorsubscription.Ajoint

stocklimitedcompanymaybeincorporatedbyaminimumofonebutnotmorethan200

promoters,andatleasthalfofthepromotersmusthaveresidencewithinthePRC.

Thepromotersofajoint-stockcompanyincorporatedbysubscriptionshalconvenean

inauguralmetingofthecompanywithin30daysafterthesharecapitalhasbenpaid-upandshal

notifiedalsubscribersthedateofthemetingormakeananouncementinthisregard15days

beforethemeting.Theinauguralmetingshalonlybeheldwiththepresenceofsubscribers

representingamajorityofvotingrights.Theconveningandvotingproceduresfortheinaugural

metingofajointstocklimitedcompanyincorporatedbypromotionshalbestipulatedinthe

APENDIXVSUMARYOFPRINCIPALEGALANDREGULATORYPROVISIONS

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articlesofasociationortheagrementofthepromoters.Powerstobexercisedatheinaugural

metingincludebutnotlimitedtotheadoptionofarticlesofasociationandthelectionof

membersoftheboardofdirectorsandthesupervisorycomiteofacompany.Theaforesaid

matershalbepasedbyamajorityofthevotingrightsheldbysubscriberspresentedathe

meting.

Within30daysaftertheconclusionoftheinauguralmeting,theboardofdirectorshal

aplytotheregistrationauthorityforegistrationoftheincorporationofthejointstocklimited

company.Acompanyisformalyestablishedandhasthestatusofalegalpersonafterthebusines

licensehasbenisuedbytherelevantregistrationauthority.

RegisteredShares

UndertheCompanyLaw,shareholdersmaymakecapitalcontributionsincash,orwith

non-monetarypropertythatmaybevaluedinmoneyandlegalytransfered,suchascontribution

inkindorintelectualpropertyrights,landuserights,shareholdingorclaims.

TheOverseasListingTrialMeasuresprovidesthatdomesticenterprisesthatarelisted

overseasmayraisefundsandistributedividendsinforeigncurenciesorRenminbi.

UndertheCompanyLaw,ajointstocklimitedcompanyisrequiredtomaintainaregisterof

shareholdersdetailingthefolowinginformation:(i)thenameandomicileofeachshareholder;

(i)theclasandnumberofsharesubscribedforbyeachshareholder;(i)theserialnumberof

sharesifisuedinpaperform;and(iv)thedateonwhicheachshareholderacquiredtheshares.

AlotmentandIsueofShares

Alisueofsharesofajointstocklimitedcompanyshalbebasedontheprinciplesof

fairnesandjustice.Thesameclasofsharesmustcaryequalrights.Sharesisuedathesame

timeandwithinthesameclasmustbeisuedonthesameconditionsandathesameprice.It

mayisuesharesatparvalueoratapremium,butitmaynotisuesharesbelowtheparvalue.

DomesticenterprisesisuedandlistedoverseashalfilewiththeCSRCinacordancewith

theOverseasListingTrialMeasures,submitfilingreports,legalopinionsandotherelevant

materials,andtruthfuly,acuratelyandcompletelyexplainshareholderinformationandother

information.Whereadomesticenterprisedirectlyisuesandislistedoverseas,theisuershalfile

withtheCSRC.Ifadomesticenterpriseisindirectlylistedoverseas,theisuershaldesignatea

majordomesticoperatingentityasthedomesticresponsiblepersonandfilewiththeCSRC.

APENDIXVSUMARYOFPRINCIPALEGALANDREGULATORYPROVISIONS

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IncreaseinShareCapital

UndertheCompanyLaw,inthecaseofajointstocklimitedcompanyisuingnewshares,

resolutionshalbepasedathegeneralmetinginrespectoftheclasandnumberofnew

shares,theisuepriceofthenewshares,thecomencementandendatesfortheisuanceofnew

sharesandtheclasandnumberofthenewsharesproposedtobeisuedtoexistingshareholders,

ifany.Ifnoparvaluestockisisued,morethanhalfoftheprocedsfromtheisuanceofshares

shalbeincludedintotheregisteredcapital.Aditionaly,ifacompanyintendstomakepublic

oferingofshares,itisrequiredtocompletetheregistrationwiththesecuritiesregulatory

authorityoftheStateCouncilandanouncesthedocuments.

ReductionofShareCapital

Acompanymayreduceitsregisteredcapitalinacordancewiththefolowingprocedures

prescribedbytheCompanyLaw:(i)toprepareabalanceshetandapropertylist;(i)acompany

makesaresolutionathegeneralmetingtoreduceitsregisteredcapital;(i)acompanyshal

informitscreditorswithin10daysandpublishananouncementinewspapersortheNational

EnterpriseCreditInformationPublicitySystemwithin30daysaftertheaprovalofresolutionof

reducingregisteredcapitalathegeneralmeting;(iv)thecreditorshalhavetherightorequire

acompanytorepayitsdebtsorprovidecorespondinguaranteswithin30daysaftereceiving

thenoticeorwithin45daysaftertheanouncementifthecreditorshavenotreceivedthenotice;

(v)whenacompanyreducesitsregisteredcapital,itshalregisterthechangewithacompany

registrationauthorityinacordancewiththelaw.

Whenacompanyreducesitsregisteredcapital,itmustreducetheamountofcapital

contributionorsharesinproportiontothecapitalcontributionorsharesheldbytheshareholders,

unlesotherwiseprescribedbyanylaw,oragreduponbyaltheshareholdersofalimited

liabilitycompany,oraspecifiedintheArticlesofAsociationofajointstocklimitedcompany.

ShareBuy-Back

UndertheCompanyLaw,acompanyshalnotacquireitsownshares,exceptforany

folowingcircumstances:

(i)reducingtheregisteredcapitalofthecompany;(i)mergingwithothercompaniesthat

holdthesharesofthecompany;(i)usingthesharesforemployestockownershiplansor

equityincentives;(iv)withrespectoshareholdersvotingagainstanyresolutionadoptedathe

generalmetingonthemergerordivisionofthecompany,therightorequirethecompanyto

APENDIXVSUMARYOFPRINCIPALEGALANDREGULATORYPROVISIONS

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acquirethesharesheldbythem;(v)usingthesharesfortheconversionofconvertiblecorporate

bondsisuedbythecompany;(vi)asrequiredformaintenanceofthecorporatevalueand

shareholders’rightsandinterestsofalistedcompany.

Theacquisitionofsharesofacompanyforeasonspecifiedinthecaseof(i)to(i)above

shalbesubjectotheresolutionofthegeneralmeting;thepurchaseofsharesofacompanyfor

reasonspecifiedinthecaseof(i),(v)and(vi)aboveshalbesubjectotheresolutionofthe

Boardmetingatendedbymorethantwo-thirdsofthedirectorsinacordancewiththeArticlesof

Asociationortheauthorizationfromthegeneralmeting.

Folowingtheacquisitionofacompany’sharesbyacompanyinacordancewiththeabove

provisions,suchshareshalbecanceledwithin10daysfromthedateofacquisitioninthecaseof

item(i)above;suchshareshalbetransferedorcanceledwithinsixmonthsinthecaseofitems

(i)and(iv)above;thetotalnumbersofshareoftheCompanyheldbyacompanyshalnotexced

10%ofthetotalisuedsharesoftheCompany,andshalbetransferedorcanceledwithin3years

inthecaseofitems(i),(v)and(vi)above.

TransferofShares

Sharesheldbyashareholdermaybetransferedacordingtothelaw.UndertheCompany

Law,ashareholderofajointstocklimitedcompanyshouldafectatransferofhis/hershares

throughalegalyestablishedstockexchangeorbyanyothermeansasrequiredbytheState

Council.Registeredsharesmaybetransferedbyendorsementofshareholdersorbyothermeans

stipulatedbylawsoradministrativeregulations.Afterthetransfer,acompanyshalrecordthe

nameandomicileofthetransfereintheregisterofshareholders.Nochangestotheshareholder

registerprovidedintheforegoingrequirementshalbeafecteduringaperiodoftwentydays

priortotheconveningofthegeneralmetingorfivedayspriortotherecordateforacompany’s

distributionofdividends.Ifanylaw,administrativeregulation,oranyprovisionbythesecurities

regulatoryauthorityoftheStateCouncilspecifiesotherwiseforthemodificationoftheregisterof

shareholdersofalistedcompany,suchprovisionshouldprevail.

UndertheCompanyLaw,sharesisuedbyacompanypriortothepublicoferingofshares

shalnotbetransferedwithinoneyearfromthedateonwhichthesharesofacompanyarelisted

andtradedonastockexchange.Thedirectors,supervisorsandseniormanagementmembersofthe

companyshouldeclaretothecompanythesharestheyholdandthechangesthereof.Duringthe

termofoficeasdeterminedwhentheyasumetheposts,thesharestransferedeachyearshould

notexced25%ofthetotalsharestheyholdofthecompany.Sharesofacompanyheldbyits

directors,supervisorsandseniormanagementshalnotbetransferedwithinoneyearfromthe

dateonwhichthesharesofacompanyarelistedandtradedonastockexchange,norwithinhalfa

yearaftertheiresignationfromtheirpositionswithacompany.

APENDIXVSUMARYOFPRINCIPALEGALANDREGULATORYPROVISIONS

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Wherethesharesarepledgedwithinthetimelimitfortransferprescribedbylawsor

administrativeregulations,thepledgemaynotexercisethepledgerightwithinthetimelimitfor

transfer.

Shareholders

UndertheCompanyLawandGuidelinesforArticlesofAsociation,therightsofa

shareholderofacompanyinclude:(i)toreceivedividendsandotherdistributionsinproportionto

thenumberofsharesheld;(i)torequest,convene,presideover,atendandvoteinpersonor

apointaproxytoatendandvotecorespondinglyontheirbehalfatgeneralmetingsin

acordancewiththelaws;(i)tosupervisethecompany’soperations,andtoputforwardproposals

oraisenquiries;(iv)totransfer,giftorpledgethecompany’sharesheldinacordancewiththe

laws,administrativeregulationsandtheArticlesofAsociation;(v)toreviewandcopythe

ArticlesofAsociation,theregisterofmembers,counterfoilofcompanydebentures,minutesof

generalmetings,resolutionsoftheBoardmetings,resolutionsofmetingsoftheSupervisory

Comite,andfinancialandacountingreports;(vi)shareholderswhoindividualyorjointly

holdmorethan3%ofthesharesofacompanyformorethan180consecutivedaysmayreviewthe

acountingboksandacountingvouchersofacompanyinacordancewiththelaw;(vi)inthe

eventoftheterminationorliquidationofacompany,toparticipateinthedistributionofremaining

asetsoftheCompanyinacordancewiththenumberofsharesheld;(vi)shareholderswho

objectoresolutionsofmergerordivisionmadebythegeneralmetingmayrequestacompanyto

purchasetheirshares;(ix)otherightsconferedbylaws,administrativeregulations,department

rulesortheArticlesofAsociation.

Theobligationsofashareholderofacompanyinclude:(i)toabidebylaws,administrative

regulationsandtheArticlesofAsociation;(i)topaycapitalcontributionaspertheshares

subscribedforandthemethodofsubscription;(i)notoreturnsharesunlesprescribedotherwise

inlawsandadministrativeregulations;(iv)notoabuseshareholders’rightstoinfringeuponthe

interestsofacompanyorothershareholders;notoabuseacompany’statusasanindependent

legalentityorthelimitedliabilityofshareholderstoharmtheinterestsofacompany’screditors;

(v)toasumeotherobligationsrequiredbylaws,administrativeregulationsandtheArticlesof

Asociation.

GeneralMetings

UndertheCompanyLaw,thegeneralmetingofajointstocklimitedcompanyismadeupof

alshareholders.Thegeneralmetingistheorganofauthorityofacompany,whichexercisesthe

folowingfunctionsandpowers:(i)toelectandreplacedirectorsandsupervisorsandtodecideon

matersrelatingtotheremunerationofdirectorsandsupervisors;(i)toexamineandaprove

reportsoftheBoard;(i)toexamineandaprovereportsoftheSupervisoryComite;(iv)to

APENDIXVSUMARYOFPRINCIPALEGALANDREGULATORYPROVISIONS

–V-10–

---

examineandaproveacompany’sprofitdistributionplansandlosrecoveryplans;(v)toresolve

ontheincreaseoreductionofacompany’sregisteredcapital;(vi)toresolveontheisuanceof

corporatebonds;(vi)toresolveonthemerger,division,disolution,liquidationorchangeof

corporateformofacompany;(vi)toamendtheArticlesofAsociation;(ix)otherfunctionsand

powerspecifiedinprovisionoftheArticlesofAsociation.

UndertheCompanyLaw,theanualgeneralmetingsarerequiredtobeheldoncevery

year.Anextraordinarygeneralmetingisrequiredtobeheldwithintwomonthsafterthe

ocurenceofanyofthefolowingcircumstances:(i)thenumberofdirectorsislesthanthe

numberstipulatedintheCompanyLaworlesthantwo-thirdsofthenumberspecifiedinthe

ArticlesofAsociation;(i)whentheunrecoveredlosesofacompanyamountone-thirdofthe

totalpaid-upsharecapital;(i)shareholdersindividualyorjointlyholding10%ormoreofthe

company’sharesrequest;(iv)whendemednecesarybytheBoard;(v)theSupervisory

Comiteproposestoconvenethemeting;(vi)othercircumstancesastipulatedintheArticles

ofAsociation.

ThegeneralmetingshalbeconvenedbytheBoard,andpresidedoverbythechairmanof

theBoard.IntheventhathechairmanoftheBoardisincapableofperformingornot

performinghis/herduties,themetingshalbepresidedoverbythevicechairman.Inthevent

thathevicechairmanisincapableofperformingornotperforminghis/herduties,adirector

nominatedbymorethanhalfofdirectorshalpresideoverthemeting.

IftheBoardisincapableofperformingorisnotperformingitsdutiestoconvenethegeneral

meting,theSupervisoryComiteshouldconveneandpresideoverthegeneralmetingina

timelymaner.IftheSupervisoryComitefailstoconveneandpresideoverthegeneral

meting,shareholdersindividualyorjointlyholding10%ormoreofthecompany’sharesfor90

daysormoreconsecutivelymayunilateralyconveneandpresideoverthegeneralmeting.

Iftheshareholderswhoindividualyorjointlyholdmorethan10%ofthesharesofthe

companyrequestoconveneanextraordinarygeneralmeting,theBoardandtheSupervisory

Comiteshould,within10daysafterthereceiptofsuchrequest,decidewhethertoholdan

extraordinarygeneralmetingandreplytotheshareholdersinwriting.

Noticeofgeneralmetingshalstatethetimeandvenueofandmaterstobeconsideredat

themetingandshalbegiventoalshareholders20daysbeforethemeting.Anoticeof

extraordinarygeneralmetingshalbegiventoalshareholders15dayspriortothemeting.

APENDIXVSUMARYOFPRINCIPALEGALANDREGULATORYPROVISIONS

–V-11–

---

Shareholderswhoindividualyorjointlyholdmorethan1%ofthecompany’sharesmayput

forwardinterimproposalsandsubmithemtotheBoardinwriting10daysbeforethegeneral

meting.TheBoardshalnotifyothershareholderswithin2daysaftereceivingtheproposal,and

submitheinterimproposaltothegeneralmetingforconsideration.

UndertheCompanyLaw,ashareholdermayentrustaproxytoatendageneralmeting,and

itshouldclarifythematers,powerandtimelimitoftheproxy.Theproxyshalpresentawriten

powerofatorneyisuedbytheshareholdertoacompanyandshalexercisehis/hervotingrights

withinthescopeofauthorization.ThereisnospecificprovisionintheCompanyLawregarding

thenumberofshareholdersconstitutingaquoruminageneralmeting.

UndertheCompanyLaw,shareholderspresentatageneralmetinghaveonevoteforeach

sharetheyhold,exceptheshareholdersofclasifiedshares.However,sharesheldbythecompany

itselfarenotentitledtoanyvotingrights.

Thecumulativevotingsystemaybeadoptedforthelectionofdirectorsandsupervisorsat

thegeneralmetinginacordancewiththeprovisionsoftheArticlesofAsociationorthe

resolutionsofthegeneralmeting.Underthecumulativevotingsystem,eachshareshalhavethe

samenumberofvotingrightsasthenumberofdirectorsorsupervisorstobelectedathegeneral

meting,andshareholdersmayconsolidatetheirvotingrightswhencastingavote.

UndertheCompanyLawandtheGuidelinesforArticlesofAsociation,thepasingofany

resolutionrequiresafirmativevotesofshareholdersrepresentingmorethanhalfofthevoting

rightsrepresentedbytheshareholderswhoatendthegeneralmeting.Matersrelatingtomerger,

divisionordisolutionofacompany,increaseoreductionofregisteredcapital,changeof

corporateformoramendmentstotheArticlesofAsociationmustbeaprovedbymorethan

two-thirdsofthevotingrightsheldbytheshareholderspresentathemeting.

Directors

UndertheCompanyLaw,ajointstocklimitedcompanyshouldhaveaBoard,whichconsists

ofmorethanthremembers.ThetermofoficeofadirectorshalbestipulatedintheArticlesof

Asociation,buteachtermofoficeshalnotexcedthreyears.Directorsmayserveconsecutive

termsifre-elected.

Boardmetingshalbeconvenedatleastwiceayear.Aldirectorsandsupervisorshalbe

notified10daysbeforethemetingforeverymeting.TheBoardexercisesthefolowing

functionsandpowers:(i)toconvenegeneralmetingsandreportitsworktogeneralmetings;(i)

toimplementheresolutionsofthegeneralmeting;(i)todecideonacompany’sbusinesplans

andinvestmentplans;(iv)toformulateacompany’sprofitdistributionplanandlosrecoveryplan;

APENDIXVSUMARYOFPRINCIPALEGALANDREGULATORYPROVISIONS

–V-12–

---

(v)toformulateproposalsfortheincreaseoreductionofacompany’sregisteredcapitalandthe

isueofcorporatebonds;(vi)toformulateplansformerger,division,disolutionorchangeof

corporateformofacompany;(vi)todecideontheinternalmanagementstructureofacompany;

(vi)todecideontheapointmentordismisalofthemanagerofacompanyandhis/her

remuneration;todecideontheapointmentordismisalofthedeputymanagerandfinancial

oficerofacompanybasedonthenominationofthemanagerandaswelasremuneration;(ix)to

formulateacompany’sbasicmanagementsystem;(x)otherfunctionsandpowerspecifiedinthe

ArticlesofAsociationorgrantedbythegeneralmeting.

Boardmetingshalbeheldonlyifmorethanhalfofthedirectorsarepresent.Ifadirector

isunabletoatendaboardmeting,he/shemayapointanotherdirectorbyapowerofatorney

specifyingthescopeoftheauthorizationforanotherdirectortoatendthemetingonhis/her

behalf.IfaresolutionoftheBoardviolatesthelaws,administrativeregulationsortheArticlesof

Asociation,andasaresultofwhichthecompanysuferseriousloses,thedirectorsparticipating

intheresolutionshalbeliabletocompensatethecompany.However,ifitcanbeprovedthata

directorexpreslyobjectedtotheresolutionwhentheresolutionwasvotedon,andthatsuch

objectionwasrecordedintheminutesofthemeting,suchdirectormaybexemptfromsuch

liability.

UndertheCompanyLaw,apersonmaynotserveasadirectorofacompanyifhe/sheis:(i)a

personwithoutcapacityorwithrestrictedcapacity;(i)apersonwhohasbensentencedtoany

criminalpenaltyduetoanofenceofcoruption,bribery,encroachmentofproperty,

misapropriationofproperty,ordisruptingtheorderofthesocialistmarketeconomy,orhasben

deprivedofpoliticalrightsduetoacrime,whereafive-yearperiodhasnotelapsedsincethedate

ofcompletionofthesentence;ifhe/sheispronouncedforsuspensionofsentence,atwo-year

periodhasnotelapsedsincethexpirationofthesuspensionperiod;(i)apersonwhowasa

director,factorymanagerormanagerofacompanyorenterprisewhichasenteredintoinsolvent

liquidationandwhowaspersonalyliablefortheinsolvencyofsuchcompanyorenterprise,where

lesthanthreyearshavelapsedsincethedateofthecompletionoftheinsolvencyand

liquidationofsuchcompanyorenterprise;(iv)personswhowerelegalrepresentativesofa

companyorenterprisewhichaditsbusineslicenserevokeduetoviolationofthelawandhad

benclosedownbyorder,andwhowerepersonalyliable,wherelesthanthreyearshave

elapsedsincethedateoftherevocationofthebusineslicenseofthecompanyorenterpriseorthe

orderforclosure;and(v)beinglistedasoneofdishonestpersonsubjectoenforcementbythe

people’scourtduetohis/herfailuretopayofarelativelylargeamountofduedebts.

APENDIXVSUMARYOFPRINCIPALEGALANDREGULATORYPROVISIONS

–V-13–

---

TheBoardshalhaveonechairmanoftheBoard,whoshalbelectedbymorethanhalfof

althedirectors.ThechairmanoftheBoardshalexercisethefolowingfunctionsandpowers

(includingbutnotlimitedto):(i)topresideovergeneralmetingsandconveneandpresideover

Boardmetings;(i)toexaminetheimplementationofresolutionsoftheBoard;(i)toexercise

otherpowersconferedbytheBoard.

Supervisors

UndertheCompanyLaw,ajointstocklimitedcompanymayestablishasupervisory

comitecomposedofnotlesthanthremembers.TheSupervisoryComiteshalcomprise

shareholderepresentativesandanapropriateproportionoftheCompany’semploye

representatives,ofwhichtheproportionofemployerepresentativeshalnotbelesthan

one-thirdandthespecificproportionshalbestipulatedintheArticlesofAsociation.Employe

representativesoftheSupervisoryComiteshalbedemocraticalyelectedbytheCompany’s

employesathemployerepresentativeasembly,employegeneralmetingorotherwise.

Directorsorseniormanagementmembersmaynotactconcurentlyasupervisors.

TheSupervisoryComitexercisesthefolowingpowers:(i)toexaminetheCompany’s

financialafairs;(i)tosupervisetheDirectorsandseniormanagementmembersintheir

performanceoftheirdutiesandtoproposetheremovalofDirectorsandseniormanagement

memberswhohaveviolatedlaws,administrativeregulations,theArticlesofAsociationor

resolutionsofgeneralmetings;(i)todemandrectificationbyadirectororseniormanagement

memberwhentheactsofsuchpersonsareharmfultotheCompany’sinterests;(iv)toproposethe

conveningofextraordinarygeneralmetings,andtoconveneandpresideovergeneralmetings

whentheBoardfailstoperformthedutyofconveningandpresidingovergeneralmetingsunder

theCompanyLaw;(v)tosubmitproposalstothegeneralmeting;(vi)toinitiatelegalprocedings

againstDirectorsandseniormanagementmembersinacordancewiththeCompanyLaw;(vi)

otherfunctionsandpowerspecifiedintheArticlesofAsociation.

ManagersandOtherSeniorManagementMembers

UndertheCompanyLaw,acompanyshouldhaveamanagerwhoisapointedoremovedby

theBoard.ThemanagerisresponsibletotheBoardandexerciseshis/herfunctionsandpowers

acordingtotheArticlesofAsociationortheauthorizationoftheBoard.Themanageratendsthe

metingsoftheBoard.

AcordingtotheCompanyLaw,seniormanagementshalrefertothemanagers,deputy

managers,financialcontroler,secretaryoftheBoardandotherpersonelastipulatedinthe

ArticlesofAsociation.

APENDIXVSUMARYOFPRINCIPALEGALANDREGULATORYPROVISIONS

–V-14–

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DutiesofDirectors,SupervisorsandSeniorManagementMembers

Directors,supervisorsandseniormanagementmembersoftheCompanyarerequiredunder

theCompanyLawtocomplywiththerelevantlaws,regulationsandtheArticlesofAsociation,

andowefiduciaryandiligentdutiestotheCompany.Directors,supervisorsandsenior

managementmembersareprohibitedfromabusingtheirpowerstoaceptbribesorotherilegal

incomeandfromisapropriatingtheCompany’sproperties.

Directors,supervisorsandseniormanagementmembersareprohibitedfrom:(i)embezling

theCompany’spropertyormisapropriatingtheCompany’sfunds;(i)depositingtheCompany’s

fundsintoacountsundertheirownamesorthenamesofotherindividuals;(i)aceptingbribes

oranyotherilegalprocedsbytakingadvantageoftheirpowers;(iv)aceptingandposesing

comisionspaidbyathirdpartyfortransactionsconductedwiththeCompany;(v)disclosingthe

Company’secretswithoutauthorization;or(vi)otheractsinviolationoftheirfiduciarydutyto

theCompany.

Ifanydirector,supervisororseniormanagementmembersdirectlyorindirectlyconcludesa

contractorconductsatransactionwiththeCompany,he/sheshouldreporthematersrelatingto

theconclusionofthecontractortransactiontotheBoardorgeneralmeting,subjectothe

aprovaloftheBoardorgeneralmetingacordingtotheArticlesofAsociation.

TheprovisionsoftheprecedingparagraphshalaplyifanynearelativesoftheDirectors,

supervisorsorseniormanagementmembers,oranyofthenterprisesdirectlyorindirectly

controledbythedirectors,supervisorsorseniormanagementmembersoranyoftheirnear

relatives,oranyrelatedpartieswithanyotherelated-partyrelationshipwiththedirectors,

supervisorsorseniormanagementmembers,concludesacontractorconductsatransactionwith

theCompany.

NeitherDirectors,supervisorsnorseniormanagementmembersmaytakeadvantageoftheir

positionstosekanybusinesoportunitythatbelongstotheCompanyforthemselvesorany

otherpersonexceptunderthefolowingcircumstances:(i)wheretheyhavereportedtotheBoard

orthegeneralmetingandthematerhasbenaprovedbyaresolutionoftheBoardorthe

generalmetingacordingtotheArticlesofAsociation;or(i)wheretheCompanycanotmake

useofthebusinesoportunityastipulatedbylaws,administrativeregulationsortheArticlesof

Asociation.

Whereanydirector,supervisororseniormanagementmemberfailstoreportotheBoardor

thegeneralmetingandobtainsaprovalbyaresolutionoftheBoardorthegeneralmeting

acordingtotheArticlesofAsociation,he/shemaynotengageinanybusinesthatisimilarto

thatoftheCompanywherehe/sheservesforhimself/herselforforanyotherperson.

APENDIXVSUMARYOFPRINCIPALEGALANDREGULATORYPROVISIONS

–V-15–

---

Adirector,supervisororseniormanagementmemberwhocontravenesanylaws,

administrativeregulationsortheArticlesofAsociationintheperformanceofhis/herduties,thus

causinganylostotheCompany,shalbepersonalyliableforthedamagestotheCompany.

FinanceandAcounting

UndertheCompanyLaw,theCompanyshalestablishitsfinancialandacountingsystems

acordingtothelaws,administrativeregulationsandtheregulationsofthefinancialdepartmentof

theStateCouncil.Athendofeachfiscalyear,theCompanyshalprepareafinancialand

acountingreportwhichshalbeauditedbyanacountingfirminacordancewiththelaw.The

financialandacountingreportshalbepreparedinacordancewiththelaws,administrative

regulationsandtheregulationsofthefinancialdepartmentoftheStateCouncil.

Ajointstocklimitedcompanyshalmakeitsfinancialandacountingreportsavailableathe

companyforinspectionbytheshareholders20daysbeforetheconveningofananualgeneral

meting.Ajointstocklimitedcompanyisuingitsharesinpublicmustpublishitsfinancialand

acountingreports.

Whendistributingeachyear’safter-taxprofits,theCompanyshalsetaside10%ofitsprofits

intoitstatutoryreservefund.TheCompanycanolongerwithdrawstatutoryreservefundifits

statutoryreservefundhasacumulatedtomorethan50%oftheregisteredcapital.Ifthestatutory

reservefundoftheCompanyisinsuficientomakeupforthelosesofthepreviousyears,the

curentyearprofitshalbeusedtomakeupforthelosesbeforemakingalocationstothe

statutoryreserveinacordancewiththeprecedingparagraph.AftertheCompanyhasmadean

alocationtothestatutoryreservefundfromitsafter-taxprofit,itmayalsomakeanalocationto

thediscretionaryreservefundfromitsafter-taxprofituponaresolutionofthegeneralmeting.

Ajointstocklimitedcompanymaydistributeprofitsinproportiontothenumberofshares

heldbyitshareholders,exceptforprofitdistributionsthatarenotinproportiontothenumberof

sharesheldinacordancewiththeprovisionsoftheArticlesofAsociationofthejointstock

limitedcompany.

Thepremiumoverthenominalvalueofthesharesofajointstocklimitedcompanyfromthe

isueofshares,theamountofshareprocedsfromtheisuanceofno-parsharesthathavenot

bencreditedtotheregisteredcapitalandotherincomesrequiredbythefinancialdepartmentof

theStateCounciltobetreatedasthecapitalreservefundshalbeacountedforasthecapital

reservefundoftheCompany.

APENDIXVSUMARYOFPRINCIPALEGALANDREGULATORYPROVISIONS

–V-16–

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ThereservefundoftheCompanyshalbeusedtomakeuplosesoftheCompany,expand

theproductionandoperationoftheCompanyorincreasethecapitaloftheCompany.Wherethe

reservefundofacompanyisusedformakinguploses,thediscretionaryreserveandstatutory

reserveshalbefirstlyused.Iflosestilcanotbemadeup,thecapitalreservecanbeused

acordingtotherelevantprovisions.Whenthestatutoryreservefundisconvertedtoincrease

registeredcapital,thebalanceofthestatutoryreservefundshalnotbelesthan25%ofthe

registeredcapitalbeforesuchconversion.

Thecompanyshalnotkepacountingboksotherthanthoseprovidedbylaw.

ApointmentandDismisalofAcountingFirms

PursuantotheCompanyLaw,thengagementordismisalofanacountingfirmresponsible

fortheCompany’sauditingshalbedeterminedbythegeneralmeting,theBoardorthe

SupervisoryComiteinacordancewiththeArticlesofAsociation.Theacountingfirmshal

bealowedtomakerepresentationswhenthegeneralmeting,theBoardortheSupervisory

Comitevotesonthedismisaloftheacountingfirm.TheCompanyshalprovidetrueand

completeacountingvouchers,acountingboks,financialandacountingreportsandother

acountingmaterialstothengagedacountingfirm,andshalnotrefuse,concealormakefalse

statements.

TheGuidelinesfortheArticlesofAsociationprovidethatheCompanyguarantesto

providetrueandcompleteacountingvouchers,acountingboks,financialandacountingreports

andotheracountingmaterialstothengagedacountingfirm,andshalnotrefuse,concealor

makefalsestatements.Theauditfeoftheacountingfirmshalbedecidedbythegeneral

meting.

ProfitDistribution

WheretheCompanydistributesprofitstoshareholdersinviolationoftheprovisionsofthe

CompanyLaw,theshareholdershalreturntheprofitsdistributedinviolationoftheprovisionsto

theCompany.IflosesarecausedtotheCompany,theshareholders,aswelastheresponsible

directors,supervisorsandseniormanagementmembers,shalbearliabilityforcompensation.

DisolutionandLiquidation

AcordingtotheCompanyLaw,acompanyshalbedisolvedforthefolowingreasons:(i)

thetermofbusinestipulatedintheArticlesofAsociationhasexpiredorothereventsof

disolutionspecifiedintheArticlesofAsociationhaveocured;(i)aresolutionondisolutionis

adoptedbythegeneralmeting;(i)disolutionisrequireduetothemergerordivisionofthe

APENDIXVSUMARYOFPRINCIPALEGALANDREGULATORYPROVISIONS

–V-17–

---

Company;(iv)thebusineslicenseisrevoked,ortheCompanyisorderedtobeclosedownoris

deregisteredinacordancewiththelaw;(v)wheretheCompanyencounterseriousdificultiesin

itsoperationandmanagement,anditscontinuedexistencewilcausesignificantlosestothe

interestsofshareholders,andwheretheisuecanotberesolvedthroughothermeans,

shareholdersholdingmorethan10%ofthetotalshareholders’votingrightsoftheCompanymay

requesthePeople’sCourtodisolvetheCompany.

Ifanyofthesituationsasmentionedintheprecedingparagrapharises,theCompanyshal

publicizethesituationsthroughtheNationalEnterpriseCreditInformationPublicitySystemwithin

tendays.

WheretheCompanyisdisolvedinacordancewithsub-paragraph(i)above,itmaycaryon

itsexistencebyamendingitsArticlesofAsociationoruponaresolutionofthegeneralmeting,

whichmustbeaprovedbymorethantwo-thirdsofthevotingrightsheldbytheshareholders

presentathegeneralmeting.WheretheCompanyisdisolvedpursuantosub-paragraphs(i),

(i),(iv)or(v)above,itshalbeliquidated.Thedirectors,whoaretheliquidationobligorsofthe

Company,shalformaliquidationgrouptocaryoutliquidationwithin15daysfromthedateof

ocurenceofthecauseofdisolution.Theliquidationgroupshalbecomposedofthedirectors,

unlesitisotherwiseprovidedforintheArticlesofAsociationoritisotherwiselectedbythe

resolutionofthegeneralmeting.Theliquidationobligorshalbeliableforcompensationifthey

failtofulfiltheirobligationsofliquidationinatimelymaner,andthusanylosiscausedtothe

companyorthecreditors.

Iftheliquidationgroupfailstobeformedwithinthetimelimitorfailstocaryouthe

liquidationafteritsformation,anyinterestedpartymayrequesthePeople’sCourtodesignate

relevantpersonstoformaliquidationgroup.ThePeople’sCourtshalaceptsuchrequestand

organizealiquidationgrouptocaryoutheliquidationinatimelymaner.

Theliquidationgroupshalexercisethefolowingfunctionsandpowersduringthe

liquidationperiod:(i)toliquidatetheCompany’spropertyandpreparethebalanceshetandthe

listofproperty;(i)tonotifycreditorsbysendingnoticesormakingpublicanouncements;(i)to

dealwiththeoutstandingbusinesoftheCompanyinvolvedintheliquidation;(iv)topayal

outstandingtaxesandtaxesarisinginthecourseofliquidation;(v)toliquidateclaimsandebts;

(vi)todistributetheremainingpropertyoftheCompanyafterpayingofdebts;(vi)toparticipate

incivilitigationactivitiesonbehalfoftheCompany.

APENDIXVSUMARYOFPRINCIPALEGALANDREGULATORYPROVISIONS

–V-18–

---

Theliquidationgroupshalnotifythecompany’screditorswithintendaysfromitsformation

andshalmakeapublicanouncementinthenewspaperorontheNationalEnterpriseCredit

InformationPublicitySystemwithin60days.Thecreditorshalfiletheirprofsofclaimwiththe

liquidationgroupwithin30daysfromthereceiptofthenoticeorwithin45daysasoftheisuance

ofthepublicanouncementinthecaseofailingtoreceivesuchnotice.

TheremainingpropertyoftheCompanyafterthepaymentofliquidationexpenses,

employes’wages,socialinsurancexpensesandstatutorycompensation,outstandingtaxesand

thecompany’sdebts,shalbedistributedtoshareholdersinproportiontotheirshareholdings.

Duringtheliquidationperiod,theCompanyshalcontinuetoexistbutshalnotcaryoutany

businesactivitiesunrelatedtotheliquidation.TheCompany’sasetshalnotbedistributedto

theshareholdersbeforetheliquidationinacordancewiththeprecedingparagraph.

Iftheliquidationgroup,havingthoroughlyliquidatedtheCompany’sasetsandhaving

preparedthebalanceshetandtheinventoryofasets,discoversthatheCompany’sasetsare

insuficientopayitsdebtsinful,itshalfileanaplicationtothePeople’sCourtforbankruptcy

liquidation.AfterthePeople’sCourtaceptstheaplicationforbankruptcy,theliquidationgroup

shalhandovertheliquidationmaterstothebankruptcyadministratordesignatedbythePeople’s

Court.

Uponcompletionoftheliquidation,theliquidationgroupshalpreparetheliquidationreport

tobesubmitedtothegeneralmetingorthePeople’sCourtforconfirmation,andsubmithe

liquidationreportothecompanyregistrationauthoritytoaplyforcancelationoftheCompany’s

registration.

Themembersoftheliquidationgrouperformingtheirdutiesofliquidationareobligedtobe

loyalandiligent.Anymemberoftheliquidationgroupwhoneglectstofulfilhis/herliquidation

dutiesandthuscausesanylostotheCompanyshalbeliableforcompensation,andanymember

oftheliquidationgroupwhocausesanylostoanycreditorduetohis/herintentionalorgros

negligenceshalbeliableforcompensation.

Where,afterthreyearsincethebusineslicenseoftheCompanyisrevoked,orthe

Companyisorderedtoclosedownorisderegistered,theCompanyfailstoaplyforits

deregistrationwiththecompanyregistrationauthority,thesaidauthoritymayanouncethe

Company’sderegistrationthroughtheNationalEnterpriseCreditInformationPublicitySystemfor

aperiodofnolesthan60days.Ifthereisnobjectionaftertheanouncementperiodexpires,

thecompanyregistrationauthoritymayderegistertheCompany.

APENDIXVSUMARYOFPRINCIPALEGALANDREGULATORYPROVISIONS

–V-19–

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OverseasListing

AcordingtotheOverseasListingTrialMeasures(《境外上市试行办法》),whereanisuer

makesanoverseasinitialpublicoferingorlisting,itshalfilewiththeCSRCwithin3working

daysaftersubmitingtheaplicationdocumentsforoverseasisuanceandlisting.Ifanisuer

isuesecuritiesinthesameoverseasmarketafteroverseasisuanceandlisting,itshalfilewith

theCSRCwithin3workingdaysafterthecompletionoftheisuance.Ifanisuerisuesandlists

inotheroverseasmarketsafteroverseasisuanceandlisting,itshalfileinacordancewiththe

provisionsofParagraph1,Article16oftheOverseasListingTrialMeasures.Moreover,ifthe

filingmaterialsarecompleteandmetherequirements,theCSRCshalcompletethefilingwithin

20workingdaysfromthedateofreceivingthefilingmaterials,andpublicizethefiling

informationthroughthewebsite.Ifthefilingmaterialsareincompleteordonotmethe

requirements,theCSRCshalinformtheisuerofthematerialstobesuplementedwithin5

workingdaysaftereceivingthefilingmaterials.Theisuershalsuplementhematerialswithin

30workingdays.

LosofShareCertificates

Ifthesharecertificatesinregisteredformareitherstolen,lostordestroyed,theshareholders

may,inacordancewiththepublicnoticeproceduresetoutintheCivilProcedureLaw(《民事诉

讼法》),aplytothePeople’sCourtforadeclarationthatsuchcertificateswilnolongerbevalid.

AfterthePeople’sCourtdeclaredthatsuchcertificateswouldnolongerbevalid,theshareholders

mayaplytotheCompanyfortheisueofreplacementcertificates.

TerminationofListing

AcordingtotheOverseasListingTrialMeasures(《境外上市试行办法》),incaseofactive

orcompulsoryterminationoflisting,theisuershalreporthespecificsituationtotheCSRC

within3workingdaysfromthedateofocurenceandanouncementoftherelevantmaters.

SecuritiesLawsAndRegulations

InOctober1992,theStateCouncilestablishedtheSecuritiesComiteandtheCSRC.The

SecuritiesComitewasresponsibleforcordinatingthedraftingofsecuritiesregulations,

formulatingsecurities-relatedpolicies,planingthedevelopmentofsecuritiesmarkets,directing,

cordinatingandsupervisingalsecurities-relatedinstitutionsinChinandadministeringthe

CSRC.TheCSRCwastheregulatoryarmoftheSecuritiesComiteandwasresponsiblefor

draftingofregulatoryprovisionsofsecuritiesmarkets,supervisingsecuritiescompanies,regulating

publicisuanceofsecuritiesbyChinesecompaniesinbothdomesticandoverseasmarkets,

APENDIXVSUMARYOFPRINCIPALEGALANDREGULATORYPROVISIONS

–V-20–

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regulatingthetradingofsecurities,compilingsecurities-relatedstatisticsandundertakingresearch

andanalysis.On29March1998,theStateCouncilconsolidatedtheabovetwodepartmentsand

reorganizedtheCSRC.

TheProvisionalRegulationsConcerningtheIsueandTradingofShares(《股票发行与交易

管理暂行条例》)promulgatedbytheStateCouncilandefectiveon22April1993coverthe

aplicationandaprovalproceduresforpublicoferingsofshares,tradinginshares,the

acquisitionoflistedcompanies,thedeposit,setlementandtransferoflistedshares,thedisclosure

ofinformationwithrespectoalistedcompany,investigationandpenaltiesandisputearbitration.

TheRegulationsoftheStateCouncilConcerningtheDomesticListedForeignSharesofJoint

StockLimitedCompanies(《国务院关于股份有限公司境内上市外资股的规定》),whichwere

promulgatedbytheStateCouncilandcameintoefecton25December1995,mainlycoverthe

isue,subscription,tradingandpaymentofdividendsofdomesticlistedforeignsharesand

disclosureofinformationofjointstocklimitedcompanieswithdomesticlistedforeignshares.

TheSecuritiesLaw(《证券法》),whichwaslastamendedbytheSCNPConDecember28,

2019andcameintoefectonMarch1,2020,providesaseriesofprovisionsregulating,among

otherthings,theisueandtradingofsecurities,takeoversbylistedcompanies,stockexchanges,

securitiescompaniesandthedutiesandresponsibilitiesoftheStateCouncil’securitiesregulatory

authoritiesinthePRC,andcomprehensivelyregulatesactivitiesinthePRCsecuritiesmarket.The

SecuritiesLawprovidesthatadomesticenterprisemustcomplywiththerelevantprovisionsofthe

StateCouncilinisuingsecuritiesdirectlyorindirectlyoutsidethePRCorlistingandtradingits

securitiesoutsidethePRC.Curently,theisueandtradingoforeignisuedsharesaremainly

governedbytherulesandregulationspromulgatedbytheStateCouncilandtheCSRC.

ArbitrationandEnforcementofArbitralAwards

UndertheArbitrationLawofthePeople’sRepublicofChina(《中华人民共和国仲裁法》)

(the“ArbitrationLaw”),lastamendedbytheSCNPConSeptember1,2017andefectiveon

January1,2018,theArbitrationLawisaplicabletoeconomicdisputesinvolvingforeignparties

wherealpartieshaventeredintoawritenagrementoreferthematertoanarbitration

comiteconstitutedinacordancewiththeArbitrationLaw.Anarbitrationcomitemay,

beforethepromulgationbythePRCArbitrationAsociation(中国仲裁协会)ofarbitration

regulations,formulatesinterimarbitrationrulesinacordancewithrelevantregulationsunderthe

ArbitrationLawandtheCivilProcedureLaw.Wherebothpartieshaveagredtosetledisputesby

meansofarbitration,thepeople’scourtwilrefusetotakelegalactionbroughtbyapartyinthe

people’scourt.

APENDIXVSUMARYOFPRINCIPALEGALANDREGULATORYPROVISIONS

–V-21–

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UndertheArbitrationLaw,anarbitralawardisfinalandbindingontheparties.Ifaparty

failstocomplywithanaward,theotherpartymayaplytothepeople’scourtforenforcement

acordingtotheCivilProcedureLaw.Ifevidencedemonstratesanyofthefolowing

circumstances:thepartiesdonotincludeanarbitrationclauseinthecontractorsubsequentlyfail

toreachawritenarbitrationagrement;therespondentisnotproperlynotifiedoftheapointment

ofthearbitratororthearbitrationprocedings,orisunabletopresentitscaseduetoreasonsnot

atributabletotherespondent;thecompositionofthearbitraltribunalorthearbitrationprocedure

isinconsistentwiththearbitrationrules;thematersdecidedintheawardfaloutsidethescopeof

thearbitrationagrementorthearbitrationcomisionlacksjurisdiction,thepeople’scourtmay

ruletorefusenforcement.Apartysekingtoenforceanarbitralawardoforeignarbitration

comisionagainstheotherpartywhorwhosepropertyisnotwithinthePRCshalaplytoa

foreigncourtwithjurisdictionoverthecaseforecognitionandenforcement.Similarly,anarbitral

awardmadebyaforeignarbitrationbodymayberecognizedandenforcedbythepeople’scourtin

acordancewiththeprinciplesofreciprocityoranyinternationaltreatyconcludedoracededtoby

thePRC.

AcordingtotheArangementoftheSupremePeople’sCourtonMutualEnforcementof

ArbitralAwardsbetwentheMainlandandtheHongKongSpecialAdministrativeRegion(《最高

人民法院关于内地与香港特别行政区相互执行仲裁决的安排》)promulgatedbytheSupreme

People’sCourtonJanuary24,2000andefectiveonFebruary1,2000,andtheSuplementary

ArangementoftheSupremePeople’sCourtonMutualEnforcementofArbitralAwardsbetwen

theMainlandandtheHongKongSpecialAdministrativeRegion(《最高人民法院关于内地与香港

特别行政区相互执行仲裁决的补充安排》)promulgatedbytheSupremePeople’sCourton

November26,2020,awardsmadebyPRCarbitralauthoritiesmaybeapliedforenforcementin

HongKong,andHongKongarbitrationawardsmayalsobeapliedforenforcementinthePRC.

APENDIXVSUMARYOFPRINCIPALEGALANDREGULATORYPROVISIONS

–V-22–

---

ThisApendixmainlyprovidespotentialinvestorswithanoverviewoftheArticlesof

Asociation(TheArticlesofAsociationsetoutinthisApendixshaltakefectfromthedateon

whichtheoverseaslistedordinaryshares(Hshares)isuedbytheCompanyarelistedontheHong

KongStockExchange).Sincetheinformationprovidedbelowisonlyasumary,itdoesnot

containaltheinformationthatmaybeimportantopotentialinvestors.

IsuanceofShares

ThesharesoftheCompanyadoptsharecertificatesform.TheisueoftheCompany’shares

shalbeinanopen,fairandimpartialmaner.Eachshareofthesamecategoryshalhavequal

rights.Forstocksofthesamecategoriesisuedathesametime,theisueconditionsandpricefor

eachshareshalbethesame;thesamepriceshalbepaidforeachofthesharesubscribedbyany

unitorindividuals.

Increase,DecreaseandRepurchaseofShares

InlightoftheCompany’soperationalandevelopmentalneds,theCompanymayincrease

itscapitalinacordancewiththelaws,regulationsandsecuritiesregulatoryrulesoftheplace

wheretheCompany’sharesarelistedsubjectorespectiveresolutionofthegeneralmeting,by

folowingmethods:

(i)publicisuanceofshares;

(i)non-publicisuanceofshares;

(i)distributionofbonusharestoexistingshareholders;

(iv)convertingthereservefundsintosharecapital;

(v)othermeansaprovedbythelaws,administrativeregulationsandaprovedbysecurities

regulatoryauthoritiesoftheplacewheretheCompany’sharesarelisted.

TheCompanymayreduceitsregisteredcapital.TheCompanyshalreduceitsregistered

capitalinacordancewiththeproceduresetoutintheCompanyLawandotherelevant

regulationsaswelastheArticlesofAsociation.

TheCompanyshalnotrepurchaseitsownshares,exceptinanyoneofthefolowing

circumstances:

(i)toreducetheCompany’sregisteredcapital;

APENDIXVISUMARYOFTHEARTICLESOFASOCIATION

–VI-1–

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(i)tomergerwithothercompaniesholdingtheCompany’shares;

(i)tousesharesforemployestockownershiplansorequityincentives;

(iv)toacquirethesharesofshareholderswhohavevotedagainstheresolutionsonthe

mergerordivisionoftheCompanyatageneralmetingupontheirequest;

(v)tousethesharesforconversionofcorporatebondsisuedbytheCompanythatcouldbe

convertedintoitsharecertificates;

(vi)whenitisnecesaryfortheCompanytopreserveitsvalueanditshareholders’interest.

TheCompanymayacquireitsownsharesbymeansofpublicentralizedtradingorother

meansthatareaprovedbylaws,administrativeregulations,securitiesregulatoryrulesofthe

placewheretheCompany’sharesarelistedandsecuritiesregulatoryauthoritiesoftheplace

wheretheCompany’sharesarelisted.IftheCompanyrepurchasesitsownsharesunderthe

circumstancesetoutinitems(i),(v)and(vi)oftheprecedingparagraph,itshalbeconducted

bymeansofpublicentralizedtrading.IftheCompanyrepurchasesitsownsharesunderthe

circumstancesetoutinitems(i)and(i)oftheprecedingparagraph,resolutionsrelatedthereto

shalbeadoptedatageneralmeting.IftheCompanyrepurchasesitsownsharesunderthe

circumstancesetoutinitems(i),(v)and(vi)oftheprecedingparagraph,resolutionsrelated

theretoshalbeadoptedatheBoardmetingwithmorethantwo-thirdsofthedirectorsatending

subjectoaplicablesecuritiesregulatoryrulesoftheplacewheretheCompany’sharesarelisted.

AftertheacquisitionoftheCompany’shares,theCompanyshalfulfilitsinformation

disclosureobligationsinacordancewiththeSecuritiesLawandthesecuritiesregulatoryrulesof

theplacewheretheCompany’sharesarelisted.

ForAshares,aftertheCompanyrepurchasesitsownsharesinacordancewiththefirst

paragraphofArticle25oftheArticlesofAsociation,ifitfalsunderitem(i),theshareshalbe

canceledwithin10daysfromthedateofrepurchase;ifitfalsunderitems(i),(iv),theshares

shalbetransferedorcanceledwithin6months;ifitfalsunderitems(i),(v),or(vi),thetotal

numberofsharesheldbytheCompanyshalnotexced10%ofthetotalisuedsharesofthe

Company,andtheshareshalbetransferedorcanceledwithin3years.ForHshares,iflaws,

regulations,andthesecuritiesregulatoryauthoritiesoftheplacewheretheCompany’sharesare

listedhaveotherprovisionsregardingmatersrelatedtosharerepurchases,thoseprovisionshal

prevail.

APENDIXVISUMARYOFTHEARTICLESOFASOCIATION

–VI-2–

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FinancialAsistanceProvidedforAcquisitionoftheCompany’sShares

TheCompanyoritsubsidiaries(includingitsafiliatedcompanies)shalnot,bywayofa

gift,advance,guarante,compensation,loansetc.,provideanyasistancetoapersonwhoacquires

orintendstoacquirethesharesoftheCompany.

TransferofShares

TheCompany’sharesmaybetransferedinacordancewiththelaw,regulations,the

securitiesregulatoryrulesoftheplacewheretheCompany’sharesarelisted,andtheArticlesof

Asociation.AltransfersoftheHShareshalbefectedbytransferdocumentinwritingina

generalorcomonformorinanyotherformaceptabletotheBoard,includingthestandard

transferformorformoftransferspecifiedbytheHongKongStockExchangefromtimetotime.

Suchtransferdocumentmayonlybesignedbyhandor(wherethetransferorortransfereisa

corporation)stampedwiththeCompany’svalidseal.Ifthetransferorortransfereisarecognized

clearinghouseasdefinedbytherelevantprovisionsthatcomeintoefectfromtimetotime

acordingtothelawsofHongKongoritsnomine,thetransferdocumentmaybesignedbyhand

orbymachineimprint.Altransferdocumentshalbemaintainedathelegaladresofthe

CompanyorsuchplacesastheBoardmaydesignatefromtimetotime.

TheCompanydoesnotaceptitsownsharesasthecolateralofpledge.

SharesoftheCompanyheldbypromotersarenotalowedtobetransferedwithin1year

fromthedateofthestablishmentoftheCompany.NotransferofthesharesoftheCompany

isuedbeforeitspublicoferingofAshareshalbemadewithin1yearfromthedateonwhich

theAsharesoftheCompanyarelistedandtradedonthestockexchange.Thedirectors,

supervisorsandseniormanagementmembersoftheCompanyshalreportotheCompanytheir

shareholdingsandthechangesthereof,andshalnotransferinagivenyearduringtheirtermsof

oficemorethan25%ofthetotalnumberofsharesoftheCompanyheldbythem;thesharesof

theCompanyheldbythemshalnotbetransferedwithin1yearfromthedateonwhichtheshares

oftheCompanyarelistedandtraded.Theaforesaidpersonshalnotransferthesharesofthe

Companyheldbythemwithinsixmonthsfromthedateoftheiresignations.Ifthesecurities

regulatoryrulesoftheplacewheretheCompany’sharesarelistedimposeaditionalrestrictions

onthetransferoftheCompany’shares,therelevantpartieshalalsocomplywithsuch

provisions.

Whereashareholderholdingmorethan5%oftheCompany’shares,director,supervisoror

seniormanagementmemberselstheCompany’sharesorothersecuritiesofanequitynatureheld

within6monthsafterpurchase,orepurchasethemwithin6monthsaftersale,theprocedsthus

APENDIXVISUMARYOFTHEARTICLESOFASOCIATION

–VI-3–

---

earnedshalbelongtotheCompany,andtheBoardoftheCompanyshalrecovertheproceds,

exceptforthesecuritiescompaniesholdingmorethan5%ofthesharesasaresultofunderwriting

thepurchaseoftheremainingsharesafterthesaleandothercircumstancespecifiedbyCSRC.

Thesharesorothersecuritiesofanequitynatureheldbydirectors,supervisors,senior

managementmembersandnaturalpersonshareholdersreferedtointheprecedingparagraph

includethesharesorothersecuritiesofanequitynatureheldbytheirspouses,parentsand

children,aswelasharesorothersecuritiesofanequitynatureheldthroughtheacountof

others.

IftheBoardoftheCompanydoesnotabidebyaboveprovisions,shareholdershalhavethe

rightorequestheBoardtodosowithin30days.IftheBoardoftheCompanyfailstodoso

withinthesaidperiod,shareholdershalhavetherightofilealawsuitdirectlywiththepeople’s

courtintheirownameforthebenefitoftheCompany.IftheBoardoftheCompanydoesnot

abidebyaboveprovisions,theresponsibledirectorshalbejointlyliableacordingtolaw.

ShareholdersandGeneralMeting

Shareholders

TheCompanyshalmakearegisterofshareholdersinacordancewithevidentiarydocuments

providedbythesecuritiesregistrationauthoritiesoftheplacewheretheCompany’sharesare

listed.Theregisterofshareholdersisuficientevidencetoprovethatheshareholdersholdthe

Company’shares.TheoriginalregisterofshareholdersofHshareslistedinHongKongiskeptin

HongKongandisavailableforinspectionbyshareholders,butheCompanymaysuspendthe

registrationofshareholdersinacordancewithaplicablelawsandregulationsandthesecurities

regulatoryrulesoftheplacewheretheCompany’sSharesarelisted.Shareholdershalenjoy

rightsandasumeobligationsacordingtotheclasofsharestheyhold.Shareholdersholding

sharesofthesameclashalenjoythesamerightsandasumethesameobligations.

WhentheCompanyconvenesageneralmeting,distributesdividends,entersintoliquidation

andengagesinotheractivitiesthatrequiredeterminationofidentityofashareholder,theBoardor

theconvenorofageneralmetingshaldeterminetheshareholdingregistrationdate,and

shareholdersregisteredontheregisterofmembersafterthecloseofmarketonsuchdateshalbe

theshareholdersentitledtotherelevantinterests.

ShareholdersoftheCompanyshalenjoythefolowingrights:

(i)toreceivedistributionofdividendsandotherformsofbenefitsacordingtothe

proportionofsharesheld;

APENDIXVISUMARYOFTHEARTICLESOFASOCIATION

–VI-4–

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(i)tolegalyrequire,convene,presideover,participateinorauthorizeproxiestoatendthe

generalmetingandexercisecorespondingvotingrights;

(i)tosupervisetheoperationsofourCompany,providesugestionsorsubmitqueries;

(iv)totransfer,grantandpledgetheCompany’sharesheldinacordancewiththelaws,

administrativeregulations,thesecuritiesregulatoryrulesoftheplacewherethe

Company’sharesarelistedandtheArticlesofAsociation;

(v)toreadtheArticlesofAsociation,theregisterofshareholders,counterfoilofCompany

debentures,generalmetingminutes,resolutionsofBoardmetings,resolutionsof

metingsoftheSupervisoryComiteandfinancialandacountingreports;

(vi)toparticipateinthedistributionoftheremainingasetsoftheCompanyacordingto

theproportionofshareshelduponourterminationorliquidation;

(vi)toacquirethesharesofshareholderswhohavevotedagainstheresolutionsonthe

mergerordivisionoftheCompanyatageneralmetingupontheirequest;

(vi)otherightstipulatebylaws,administrativeregulations,departmentalrules,the

securitiesregulatoryrulesoftheplacewheretheCompany’sharesarelistedorthe

ArticlesofAsociation.

TheArticlesofAsociation,resolutionsofthegeneralmetingoresolutionsoftheBoard

shalbeincompliancewithlawsandregulations,andshalnotdepriveorestricthelegalrights

ofshareholders.TheCompanyshalprotecthelegitimaterightsofshareholdersandensurethey

aretreatedfairly.

Whereshareholdersrequestforinspectionoftherelevantinformationordemandmaterialsas

providedforinthepreviousarticle,theyshalprovidetheCompanywithwritendocuments

evidencingtheclasandnumberofsharesintheCompanytheyhold.Uponverificationofthe

shareholder’sidentity,theCompanyshalprovideinformationasrequestedbysuchshareholder.

IfthecontentoftheresolutionsathegeneralmetingandtheresolutionsoftheBoardofthe

Companyisinviolationoflaws,administrativeregulationsandthesecuritiesregulatoryrulesof

theplacewheretheCompany’sharesarelisted,shareholdersarentitledtorequesthepeople’s

courtoidentifytheminvalid.

APENDIXVISUMARYOFTHEARTICLESOFASOCIATION

–VI-5–

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IftheproceduresforconveningandvotingmethodathegeneralmetingandtheBoard

metingareinviolationoflaws,administrativeregulations,thesecuritiesregulatoryrulesofthe

placewheretheCompany’sharesarelistedortheArticlesofAsociationorthecontentofthe

resolutionsviolatestheArticlesofAsociation,shareholdersarentitledtorequesthepeople’s

courtorevokesuchresolutionswithin60daysfromthedateoftheresolutions.

IfadirectororseniormanagementmembercauseslosestotheCompanybyviolatingthe

laws,administrativeregulations,thesecuritiesregulatoryrulesoftheplacewheretheCompany’s

sharesarelistedortheArticlesofAsociationduringperformanceofhis/herduties,shareholders

whoindividualyorjointlyholdmorethan1%oftheCompany’sharesformorethan180

consecutivedayshavetherightorequestheSupervisoryComiteinwritingtoinitiatelegal

procedingsathepeople’scourt;ifamemberoftheSupervisoryComitecauseslosestothe

Companybyviolatingthelaws,administrativeregulations,thesecuritiesregulatoryrulesofthe

placewheretheCompany’sharesarelistedortheArticlesofAsociationduringperformanceof

his/herduties,shareholderscanrequestheBoardinwritingtoinitiatelegalprocedingsathe

people’scourt.

IftheSupervisoryComiteortheBoardrefusestoinitiatelegalprocedingsafter

receivingthewritenrequestfromshareholdersastipulatedabove,orfailstoinitiatelegal

procedingswithin30daysincethedateofreceivingtherequest,ordoesnotinitiatelegal

procedingsimediatelyincaseofemergencywhereanydelaywouldcauseireparablelosesto

theCompany’sinterests,theshareholdersasmentionedabovehavetherightoinitiatelegal

procedingsdirectlyathepeople’scourtintheirownamefortheinterestsoftheCompany.

IfanypersoninfringesthelegitimaterightsandinterestsoftheCompanyandcausesloses,

theshareholderswhoindividualyorjointlyholdmorethan1%oftheCompany’sharesformore

than180consecutivedayscaninitiatelegalprocedingsathepeople’scourtinacordancewith

theprovisionsmentionedabove.

Ifadirectororaseniormanagementmemberviolatesthelaws,administrativeregulations,

thesecuritiesregulatoryrulesoftheplacewheretheCompany’sharesarelistedortheArticlesof

Asociationandcausesdamagetotheshareholders’interests,shareholderscaninitiatelegal

procedingsathepeople’scourt.

TheshareholdersoftheCompanyshalasumethefolowingobligations:

(i)tocomplywiththelaws,administrativeregulations,thesecuritiesregulatoryrulesofthe

placewheretheCompany’sharesarelistedandtheArticlesofAsociation;

APENDIXVISUMARYOFTHEARTICLESOFASOCIATION

–VI-6–

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(i)topaycapitalcontributionasperthesharesubscribedforandthemethodof

subscription;

(i)notowithdrawsharesunlesinthecircumstancestipulatedbylawsandregulations;

(iv)notoabuseshareholder’srightstoharmtheinterestsoftheCompanyorother

shareholders;notoabusetheCompany’spositionasaindependentlegalentityor

shareholder’slimitedliabilitytoharmtheinterestsofthecreditorsoftheCompany;

(v)tokeptradesecretsoftheCompany;

(vi)tofulfilotherobligationstipulatedbythelaws,administrativeregulations,the

securitiesregulatoryrulesoftheplacewheretheCompany’sharesarelistedandthe

ArticlesofAsociation.

IfanyshareholderoftheCompanyabuseshis/hershareholder’sright,therebycausingany

lostotheCompanyorothershareholders,thesaidshareholdershalbeliableforcompensation

acordingtothelaws.IfanyshareholderoftheCompanyabusestheCompany’spositionasa

independentlegalentityorshareholder’slimitedliabilityforthepurposeofevadingrepaymentof

debts,therebyseverelydamagingtheinterestsofthecreditorsoftheCompany,thesaid

shareholdershalbearjointliabilitiesfortheCompany’sdebts.

Theshareholdersholdingmorethan5%ofthesharescaryingvotingrightsoftheCompany

shal,intheventofapledgeofthesharesheldbythem,reportotheCompanyinwritingonthe

dateofsuchevent.

NeitherthecontrolingshareholdernortheactualcontroleroftheCompanymayprejudice

theinterestsoftheCompanybytakingadvantageofhis/herelatedrelationship.Anyonewho

violatesthisprovisionandcausesanylostotheCompanyshalbeliableforthecompensation.

ThecontrolingshareholdersandactualcontrolersoftheCompanyshalbearthefiduciary

dutytowardstheCompanyandpublicshareholders.Thecontrolingshareholdershalexercisethe

rightsofthecapitalcontributorinstrictacordancewiththelaw.Thecontrolingshareholders

shalnotprejudicethelegitimaterightsandinterestsoftheCompanyandpublicshareholdersby

meansofprofitdistribution,asetrestructuring,externalinvestment,capitalapropriation,loan

guarantes,etc.,andshalnotusetheircontrolingpositiontoprejudicetheinterestsofthe

Companyandpublicshareholders.

APENDIXVISUMARYOFTHEARTICLESOFASOCIATION

–VI-7–

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IntheventoftransactionsbetwentheCompanyanditscontrolingshareholdersoractual

controlersfortheprovisionofcapital,comodities,laborservices,etc.,theCompanyshal

strictlyfolowthedecision-makingsystemforelatedtransactionstoperformthedeliberation

procesbytheBoardandthegeneralmeting,andtherelatedirectorsandrelatedshareholders

shalabstainfromvoting,soastopreventhecontrolingshareholders,actualcontrolersandtheir

relatedpartiesfromapropriatingortransferingtheCompany’scapital,asetsandother

resources.

GeneralRulesfortheGeneralMeting

ThegeneralmetingshalbetheauthorityoftheCompanyandshalexercisethefolowing

functionsandpowersinacordancewiththelaw:

(i)todecideontheoperatinguidelinesandinvestmentplansoftheCompany;

(i)toelectandreplacethedirectorsandthesupervisorswhoarenotemploye

representatives,andecideonmatersrelatingtotheremunerationofthedirectorsand

supervisors;

(i)toconsiderandaprovereportsoftheBoard;

(iv)toconsiderandaprovereportsoftheSupervisoryComite;

(v)toconsiderandaprovetheCompany’sanualfinancialbudgetsandfinalacounts;

(vi)toconsiderandaprovetheCompany’sprofitdistributionplansandplansformakingup

loses;

(vi)toresolveonincreaseoreductionintheCompany’sregisteredcapital;

(vi)toresolveontheisuanceofcorporatebonds;

(ix)toresolveonmerger,division,disolution,liquidationorchangeofcorporateformof

theCompany;

(x)toamendtheArticlesofAsociation;

(xi)toconsiderandaprovetransactionsbetwentheCompanyandrelatedpartiesvaluedat

overRMB30milionandacountingformorethan1%ofthelatestauditedtotalasets

ormarketvalueoftheCompany(exceptforprovidinguarantes);

APENDIXVISUMARYOFTHEARTICLESOFASOCIATION

–VI-8–

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(xi)toresolveontheCompany’sapointmentoremovalofacountingfirms;

(xi)toconsiderandaprovethetransactionspecifiedinArticle44oftheArticlesof

Asociation;

(xiv)toconsiderandaprovetheguarantespecifiedinArticle45oftheArticlesof

Asociation;

(xv)toconsidertheCompany’spurchaseordisposalofmaterialasetswithinoneyearwhich

reachover30%ofthelatestauditedtotalasetsoftheCompany;

(xvi)toconsiderandaprovematersrelatingtochangesintheuseofprocedsraised;

(xvi)toconsiderequityincentiveplanandemployestockownershiplans;

(xvi)tomakeanyresolutionregardingthedispositionoftheCompany’scoretechnicalsecrets

oresolutionthatmayhaveasignificantimpactontheCompany’scoretechnical

secrets;

(xix)toconsiderothermatersasrequiredbythelaws,administrativeregulations,

departmentalrules,thesecuritiesregulatoryrulesoftheplacewheretheCompany’s

sharesarelisted,ortheArticlesofAsociationwhichshalbedecidedbythegeneral

meting.

TheabovepowersofthegeneralmetingshalnotbeconferedtotheBoardorother

authorityandindividualthroughauthorization.

AnytransactionoftheCompany(excludingtheprovisionofguaranteandtransactions

withinthescopeofordinaryoperations)thatmetsanyofthefolowingcriteriashalbesubmited

tothegeneralmetingfordeliberationafterbeingdeliberatedandaprovedbytheBoard:

(i)Thetotalamountofasetsinvolvedinthetransaction(iftheasetsinvolvedhaveboth

bokvalueandvaluation,whicheverishigher)acountsforover50%ofthelatest

auditedtotalasetsoftheCompany;

(i)Thetransactionamountacountsforover50%oftheCompany’smarketvalue;

(i)Thenetasetsofthetransactionsubject(suchasequity)acountedforover50%ofthe

Company’smarketvalueinthelatestacountingyear;

APENDIXVISUMARYOFTHEARTICLESOFASOCIATION

–VI-9–

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(iv)Thebusinesincomeofthetransactionsubject(suchasequity)acountsforover50%

oftheauditedbusinesincomeoftheCompanyinthelatestacountingyear,and

excedsRMB50milion;

(v)Theprofitsgeneratedfromthetransactionacountformorethan50%oftheauditednet

profitoftheCompanyinthelatestacountingyear,andexcedRMB5milion;

(vi)Thenetprofitoftransactionsubject(suchasequity)acountsformorethan50%ofthe

auditednetprofitoftheCompanyinthelatestacountingyear,andexcedsRMB5

milion;

(vi)Othertradingcircumstancestipulatedbylaws,regulations,thesecuritiesregulatory

rulesoftheplacewheretheCompany’sharesarelistedortheArticlesofAsociation.

Ifthedatainvolvedintheaboveindexcalculationisnegative,theabsolutevalueofthedata

shalbetaken.

Theabove-mentionedtransactionamountreferstothetransactionamountpaidandthedebts

andexpensesasumed.Themarketvalueabove-mentionedreferstothearithmeticaverageofthe

closingmarketvalueofthe10tradingdaysbeforetrading.

Wherethetransactionarangementinvolvesconsiderationthatmaybepaidoreceivedinthe

future,doesnotinvolveaspecificamountorisdeterminedacordingtosetconditions,the

expectedmaximumamountisthetransactionamount.

Forsimilartransactionsrelatedtothetransactionsubjecthatocurwithina12-monthperiod,

theCompanyshalaplytheaforementionedprovisionsinacordancewiththeprincipleof

cumulativecalculation.Transactionsthathavefulfiledtherelevantreviewproceduresin

acordancewiththeaforementionedprovisionshalnolongerbeincludedinthescopeofthe

relevantcumulativecalculation.

ThefolowingactsofexternalguaranteoftheCompanyshalbesubmitedtothegeneral

metingfordeliberationandaprovalafterbeingdeliberatedandaprovedbytheBoardofthe

Company:

(i)Anyguarantetobeprovidedafterthetotalamountofexternalguarantesprovidedby

theCompanyandthesubsidiariesitcontrolshasexceded50%oftheCompany’s

auditednetasetsinthelatestperiod;

APENDIXVISUMARYOFTHEARTICLESOFASOCIATION

–VI-10–

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(i)AnyguaranteprovidedafterthetotalamountoftheCompany’sexternalguarantes

exceds30%oftheCompany’sauditedtotalasetsinthelatestperiod;

(i)TheguaranteamountoftheCompanyexceds30%oftheCompany’slatestaudited

totalasetswithinoneyear;

(iv)Anyguarantetobeprovidedforapartywhosedebt-to-asetsratioexceds70%;

(v)Thesingleguaranteforanamountmorethan10%oftheCompany’snetasetsaudited

inthelatestperiod;

(vi)Theguarantetobeprovidedtoashareholder,anactualcontrolerandhis/herelated

party;

(vi)Otherguarantecircumstancestipulatedbylaws,regulations,thesecuritiesregulatory

rulesoftheplacewheretheCompany’sharesarelistedortheArticlesofAsociation

whicharesubjectoreviewandaprovalbythegeneralmeting.

Whenthegeneralmetingconsidersaguaranteproposedforashareholder,anactual

controlerandhis/herelatedparty,thishareholderorothershareholderscontroledbythisactual

controlershalnotvotefortheproposal,whichshalhavetheafirmativevotesbyamajorityof

votesheldbyothershareholdersatendingthegeneralmeting.Whenthegeneralmetingmakesa

resolutionontheguarantementionedinitem(i),itshalbeadoptedbymorethantwo-thirdsof

thevotingrightsheldbytheshareholderspresentathemeting.

WheretheCompanyprovidesaguaranteforitscontrolingshareholder(s),actual

controler(s)andtheirelatedparties,thecontrolingshareholder(s),actualcontroler(s)andtheir

relatedpartieshalprovidecounterguarante.

WheretheCompanyprovidesguaranteforawholy-ownedsubsidiary,orprovidesguarante

foracontrolingsubsidiaryandothershareholdersofthecontrolingsubsidiaryprovideguarante

inanequalproportionacordingtotheirinterests,withoutprejudicetotheinterestsofthe

Company,theprovisionsofitems(i),(iv)and(v)abovemaybexempted.TheCompanyshal

sumarizeandisclosetheaforesaidguarantesinitsanualreportandsemi-anualreport.

Thexternalguaranteacthatisnotreviewedandaprovedbythegeneralmetingofthe

Companyinacordancewiththeaboveaprovalauthorityandreviewprocedureshalbeinvalid.

Whereanexternalguarantethatviolatestheaprovalauthorityandreviewprocedurescauses

losestothecompany,therelevantentities,suchasdirectors,seniormanagementmembersand

otheresponsiblesubjectshalbearcompensationliabilitiesacordingtolaw.

APENDIXVISUMARYOFTHEARTICLESOFASOCIATION

–VI-11–

---

Generalmetingsincludeanualgeneralmetingsandextraordinarygeneralmetings.The

anualgeneralmetingshalbeheldonceayearwithin6monthsafterthendoftheprevious

acountingyear.

TheCompanyshalconveneanextraordinarygeneralmetingwithin2monthsfromthedate

oftheocurenceofanyofthefolowingcircumstances:

(i)ThenumberofdirectorsislesthantheminimumquorumspecifiedintheCompany

Law,orlesthantwo-thirdsofthenumberprescribedintheArticlesofAsociation;

(i)TheuncoveredlosesofourCompanyreachone-thirdofitstotalpaid-insharecapital;

(i)TheShareholderswith10%ormoresharesoftheCompanyseparatelyorjointly

request;

(iv)TheBoardconsidersitnecesary;

(v)TheSupervisoryComiteproposesthatsuchametingshalbeheld;

(vi)Othercircumstancesconferedbythelaws,administrativeregulations,departmental

rules,thesecuritiesregulatoryrulesoftheplacewheretheCompany’sharesarelisted

andtheArticlesofAsociation.

TheCompanyshalconveneageneralmetingatitsdomicileoratotherplaceasmaybe

specifiedinthenoticeofgeneralmeting.Afterthenoticeofthegeneralmetingisisued,the

venueoftheon-sitemetingofgeneralmetingshalnotbechangedwithoutjustifiablereasons.If

itisrealynecesarytochangethevenue,theconvenershalmakeapublicanouncementatleast

2workingdaysbeforethedateoftheon-sitemetingandexplainthereasons.Thegeneral

metingshalusualysetupavenueandbeheldintheformofon-sitemetings.TheCompany

wilalsoprovideonlinevotingmethodstofacilitateshareholders’participationingeneralmetings

inacordancewiththesecuritiesregulatoryrulesoftheplacewheretheCompany’sharesare

listed.Shareholderswhoparticipateinthegeneralmetingthroughtheabovemeanshalbe

demedtobepresent.

TheCompanywilapointlawyerstoisuelegalopinionsandmakepublicanouncements

onthefolowingisueswhenconveningeneralmetings:

(i)Whethertheconveningandconveningproceduresofthemetingcomplywithlaws,

administrativeregulationsandtheArticlesofAsociation;

APENDIXVISUMARYOFTHEARTICLESOFASOCIATION

–VI-12–

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(i)Whetherthequalificationsoftheparticipantsandconvenersarelegalandvalid;

(i)Whetherthevotingproceduresandvotingresultsofthemetingarelegalandvalid;

(iv)LegalopinionsonotherelatedisuesasrequestedbytheCompany.

ConveningofGeneralMetings

TheindependentdirectorshalhavetherightoproposetotheBoardtoconvenean

extraordinarygeneralmeting,whichshalbeaprovedbyamajorityofalindependentdirectors.

Withrespectotheproposaloftheindependentdirectorequestingtheconveningofan

extraordinarygeneralmeting,theBoardshalgivewritenfedbackonwhetherornotoagreto

theconveningofanextraordinarygeneralmetingwithin10daysaftereceivingtheproposal,in

acordancewithlaws,administrativeregulations,thesecuritiesregulatoryrulesoftheplacewhere

theCompany’sharesarelistedandtheArticlesofAsociation.IftheBoardagrestoconvenean

extraordinarygeneralmeting,itshalisueanoticeofconveningthegeneralmetingwithin5

daysaftermakingtheresolutionoftheBoard;iftheBoardoesnotagretoconvenean

extraordinarygeneralmeting,itshalstatethereasonsandmakeapublicanouncement.

TheSupervisoryComiteshalhavetherightoproposetotheBoardtoconvenean

extraordinarygeneralmeting,andshalsubmitsuchproposaltotheBoardinwriting.TheBoard

shalgivewritenfedbackonwhetherornotoagretoconveneanextraordinarygeneralmeting

within10daysaftereceivingtheproposal,inacordancewithlaws,administrativeregulations,

thesecuritiesregulatoryrulesoftheplacewheretheCompany’sharesarelistedandtheArticles

ofAsociation.IftheBoardagrestoconveneanextraordinarygeneralmeting,itshalisuea

noticeofconveningthegeneralmetingwithin5daysaftermakingtheresolutionoftheBoard.

AnychangetotheoriginalproposalinthenoticeshalbeaprovedbytheSupervisoryComite.

IftheBoardoesnotagretoconveneanextraordinarygeneralmeting,orfailstogivefedback

within10daysaftereceivingtheproposal,itshalbedemedthatheBoardisunableordoesnot

performthedutyofconveningthegeneralmeting,andtheSupervisoryComitemayconvene

andpresideoverthemetingonitsown.

Shareholderswhoindividualyorcolectivelyholdmorethan10%ofthesharesofthe

CompanyshalhavetherightorequestheBoardtoconveneanextraordinarygeneralmeting

andshalsubmitsuchrequestotheBoardinwriting.TheBoardshalprovidewritenfedbackon

whetherornotoagretoconveneanextraordinarygeneralmetingwithin10daysaftereceiving

therequest,inacordancewithlaws,administrativeregulations,thesecuritiesregulatoryrulesof

theplacewheretheCompany’sharesarelistedandtheArticlesofAsociation.IftheBoard

agrestoconveneanextraordinarygeneralmeting,itshalisueanoticeconveningthegeneral

metingwithin5daysaftermakingtheresolutionoftheBoard.Anychangeintheoriginalrequest

APENDIXVISUMARYOFTHEARTICLESOFASOCIATION

–VI-13–

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inthenoticeshalobtaintheconsentoftherelevantshareholders.IftheBoardoesnotagreto

conveneanextraordinarygeneralmeting,orfailstogivefedbackwithin10daysaftereceiving

therequest,shareholderswhoindividualyorcolectivelyholdmorethan10%ofthesharesofthe

CompanyshalhavetherightoproposetotheSupervisoryComitetoconvenean

extraordinarygeneralmeting,andshalsubmitarequestotheSupervisoryComiteinwriting.

IftheSupervisoryComiteagrestoconveneanextraordinarygeneralmeting,itshalisuea

noticeofconveningthegeneralmetingwithin5daysaftereceivingtherequest,andanychange

intheoriginalrequestinthenoticeshalobtaintheconsentoftherelevantshareholders.Ifthe

SupervisoryComitefailstoisueanoticeofthegeneralmetingwithintheprescribedtime,it

shalbedemedthatheSupervisoryComitehasfailedtoconveneandpresideoverthegeneral

meting.Shareholderswhoindividualyorcolectivelyholdmorethan10%oftheCompany’s

sharesformorethan90consecutivedaysmayconveneandpresideoverthegeneralmetingby

themselves.

IftheSupervisoryComiteorshareholdersdecidetoconveneageneralmetingontheir

own,theyshalnotifytheBoardinwritingandcompletethenecesaryreports,anouncementsor

filingsinacordancewiththesecuritiesregulatoryrulesandtheprovisionsofthestockexchange

oftheplacewheretheCompany’sharesarelisted.Beforetheanouncementoftheresolutionof

thegeneralmeting,theshareholdingratioftheconveningshareholdershalnotbelesthan

10%.TheSupervisoryComiteorconveningshareholdershalcompletethenecesaryreportor

anouncementinacordancewiththesecuritiesregulatoryrulesandtheprovisionsofthestock

exchangeoftheplacewheretheCompany’sharesarelistedwhenisuingthenoticeofgeneral

metingandtheanouncementofresolutionsofgeneralmeting.

TheBoardandtheSecretarytotheBoardshalcoperatewiththegeneralmetingconvened

bytheSupervisoryComiteorshareholdersthemselves.TheBoardwilprovidearegisterof

shareholdersasatheshareholdingregistrationdate.Theregisterofshareholdersobtainedbythe

convenershalnotbeusedforanypurposeotherthanconveningeneralmetings.

TheCompanyshalbearthexpensesnecesaryforgeneralmetingsconvenedbythe

SupervisoryComiteorshareholdersthemselves.

ProposalsandNoticesofGeneralMetings

Thecontentoftheproposalshalfalwithinthescopeofpowerofthegeneralmeting,have

cleartopicsandspecificresolutions,andcomplywiththerelevantprovisionsoflaws,

administrativeregulations,thesecuritiesregulatoryrulesoftheplacewheretheCompany’shares

arelistedandtheArticlesofAsociation.

APENDIXVISUMARYOFTHEARTICLESOFASOCIATION

–VI-14–

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WhentheCompanyconvenesageneralmeting,theBoard,theSupervisoryComiteand

shareholdersholdingmorethan3%ofthesharesoftheCompanyindividualyorjointlyshalhave

therightoputforwardproposalstotheCompany.Shareholderswhoindividualyorcolectively

holdmorethan3%ofthesharesoftheCompanymayputforwardtemporaryproposalsandsubmit

themtotheconvenerinwriting10daysbeforethegeneralmeting.Theconvenershal,isuea

suplementarynoticeofthegeneralmetinganouncingthecontentsofthetemporaryproposal,

within2daysaftereceivingtheproposal.Ifthegeneralmetingispostponeduetothe

publicationofsuplementarynoticeofthegeneralmetinginacordancewiththeprovisionsof

thesecuritiesregulatoryrulesoftheplacewheretheCompany’sharesarelisted,theconveningof

thegeneralmetingshalbepostponedinacordancewiththeprovisionsofthesecurities

regulatoryrulesoftheplacewheretheCompany’sharesarelisted.

Exceptaspecifiedabove,theconvenershalnotmodifytheproposalslistedinthenoticeof

generalmetingoradnewproposalsaftersendingthenoticeofgeneralmeting.Iftheproposal

isnotspecifiedinthenoticeofgeneralmetingordoesnotcomplywithArticle56oftheArticles

ofAsociation,thegeneralmetingshalnotvoteandmakearesolution.

Theconvenershalnotifyeachshareholderinwriting(includinganouncement)20days

beforetheanualgeneralmeting,andthextraordinarygeneralmetingshalnotifyeach

shareholderinwriting(includinganouncement)15daysbeforethemeting.Thedateofthe

metingshalnotbeincludedinthecalculationofthecomencementperiod.

Thenoticeofageneralmetingincludesthefolowing:

(i)Thetime,placeandurationofthemeting;

(i)Thematersandproposalstobediscusedathemeting;

(i)Inplainlanguage:alshareholdershavetherightoatendthegeneralmeting,andmay

entrustaproxyinwritingtoatendthemetingandvote.Suchaproxydoesnotnedto

beashareholderoftheCompany;

(iv)Theshareholdingregistrationdateoftheshareholdersentitledtoatendthegeneral

meting.Theintervalbetwentheshareholdingregistrationdateofthegeneralmeting

andthedateofthemetingshalnotbemorethan7workingdaysandnotlesthan2

tradingdays.Oncetheshareholdingregistrationdateisconfirmed,itshalnotbe

changed;

(v)Nameandtelephonenumberofthepermanentcontactpersonforconferenceafairs;

APENDIXVISUMARYOFTHEARTICLESOFASOCIATION

–VI-15–

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(vi)Votingtimeandvotingprocedurefornetworksorothermeans.

Thenoticeofthegeneralmetingandthesuplementarynoticeshalfulyandcompletely

disclosealthespecificontentsofalproposals.Ifthematertobediscusednedstheopinionof

independentdirectors,theopinionsandreasonsofindependentdirectorswilbedisclosedathe

sametimewhenthenoticeofgeneralmetingorsuplementarynoticeisisued.Thestartimeof

votingbynetworkorothermeansathegeneralmetingshalnotbearlierthan3:00p.m.onthe

daybeforetheon-sitegeneralmeting,norlaterthan9:30a.m.onthedayoftheon-sitegeneral

meting,andthendtimeshalnotbearlierthan3:00p.m.onthedayoftheon-sitegeneral

meting.

Ifthelectionofdirectorsandsupervisorsistobediscusedathegeneralmeting,the

noticeofthegeneralmetingshalfulydisclosethedetailedinformationofthecandidatesfor

directorsandsupervisors,includingatleasthefolowingcontents:

(i)Educationbackground,workexperience,part-timejobandotherpersonalinformation;

(i)WhetherthereisanyrelationshipwiththeCompanyoritsdirectors,supervisors,senior

managementmembers,controlingshareholders,actualcontrolersandshareholders

holdingmorethan5%oftheshares;

(i)DisclosureofthenumberofsharesheldintheCompany;

(iv)WhetherithasbenpunishedbyCSRCandotherelevantdepartmentsandpunishedby

stockexchanges;

(v)Informationofothercandidatesfordirectorsandsupervisorsrequiredtobedisclosedby

thesecuritiesregulatoryrulesoftheplacewheretheCompany’sharesarelisted.

Exceptforthelectionofdirectorsandsupervisorsbycumulativevotingsystem,each

candidatefordirectorandsupervisorshalsubmitasingleproposal.

Afterthenoticeofthegeneralmetinghasbengiven,thegeneralmetingshalnotbe

postponedorcanceledwithoutjustifiablereasons,andtheproposalspecifiedinthenoticeofthe

generalmetingshalnotbecanceled.Incaseofpostponementorcancelation,theconvenershal

sendanoticeatleast2workingdaysbeforethescheduledateandexplainthereasons.Wherethe

securitiesregulatoryrulesoftheplacewheretheCompany’sharesarelistedhavespecial

provisionsontheproceduresforpostponingorcancelingthegeneralmeting,suchprovisions

shalprevailonthepremiseofnotviolatingthedomesticregulatoryrequirements.

APENDIXVISUMARYOFTHEARTICLESOFASOCIATION

–VI-16–

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HoldingofGeneralMetings

TheCompany’sBoardandotherconvenershaltakenecesarymeasurestoensurethe

normalorderofthegeneralmeting.Measureshalbetakentostopanybehaviorthatinterferes

withtheoperationofthemeting,provokestroublesandinfringesuponthelegitimaterightsand

interestsofshareholders,whichshalalsobereportedtotherelevantdepartmentsforinvestigation

andpunishmentinatimelymaner.

Alordinaryshareholderswhoarelawfulyregisteredasatheshareholdingregistrationdate

inacordancewiththesecuritiesregulatoryrulesoftheplacewheretheCompany’sharesare

listed,ortheirproxies,shalbentitledtoatendthegeneralmetingandexercisetheirvoting

rightsinacordancewithrelevantlaws,regulations,thesecuritiesregulatoryrulesoftheplace

wheretheCompany’sharesarelistedandtheArticlesofAsociation(unlesindividual

shareholdersarerequiredtowaivetheirvotingrightsoncertainmatersunderthesecurities

regulatoryrulesoftheplacewheretheCompany’sharesarelisted).Ashareholdermayatendand

voteathegeneralmetinginpersonorbyproxy(whodoesnotnedtobeashareholderofthe

Company).

Individualshareholdersatendingthemetinginpersonshalpresentheirpersonalidentity

cardsorothervalidcertificatesordocumentsthatcanverifytheiridentity,aswelastheirstock

acountcard(profofshareholding);proxiesatendingthemetingshalpresentheirvalid

identitycardsandtheproxystatementsfromtheshareholder.Corporateshareholdershalbe

representedathemetingbythelegalrepresentativeoraproxyauthorizedbythelegal

representative.

Legalrepresentativesatendingthemetingshalpresentheirpersonalidentitycardsorvalid

documentsthatcanproveitsidentityasthelegalrepresentative;proxiesauthorizedtoatendthe

metingshalpresentheirpersonalidentitycards,thewritenproxystatement(withthecorporate

seal)legalyisuedbythelegalrepresentativeofthecorporateshareholderandprofof

shareholdingoftheprincipal.

Shareholdersofapartnershipenterpriseshalberepresentedathemetingbythemanaging

partner,thedelegateapointedbythemanagingpartner,oraproxyentrustedbythemanaging

partnerorthedelegateapointedbythemanagingpartner.Themanagingpartnerorthedelegate

apointedbythemanagingpartneratendingthemetingshalpresentheirpersonalidentity

cards,validocumentsthatcanproveitsidentityasthemanagingpartnerorthedelegate

apointedbythemanagingpartner,andtheprofofshareholding;proxiesauthorizedtoatendthe

metingshalpresentheirpersonalidentitycards,thewritenproxystatement(withthe

partnershipenterpriseseal)legalyisuedbythemanagingpartnerofthepartnershipenterpriseor

thedelegateapointedbythemanagingpartner,andprofofshareholdingoftheprincipal.

APENDIXVISUMARYOFTHEARTICLESOFASOCIATION

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IfashareholderisaRecognisedClearingHouse(oritsproxy(ies)asdefinedbytherelevant

lawsandregulationsoftheplacewheretheCompany’sharesarelisted,suchshareholderis

entitledtoapointoneormorepersonsorCompanyrepresentativesasitdemsfitoactonits

behalfatanymeting(includingbutnotlimitedtothegeneralmetingandthemetingof

creditors);wheremorethanonepersonisauthorized,theleterofauthorizationshalspecifythe

numberandclasofsharesinvolvingeachpersonsoauthorized.Theleterofauthorizationshould

besignedbytheauthorizedoficeroftheRecognisedClearingHouse.Suchpersonsoauthorized

shalbentitledtoatendthemeting(whoarenotrequiredtoprovidetheprofofshareholding,

thenotarizedpowerofatorneyand/orfurtherevidenceofhisdulyauthorization),speakathe

metingandexercisetheirightsonbehalfoftheRecognisedClearingHouse(oritsproxy(ies)as

iftheywereindividualshareholdersoftheCompany.

Theproxystatementoapointanotherpersontoatendthegeneralmetingbyashareholder

shalcontainthefolowing:

(i)thenameoftheproxy;

(i)thenumberofsharesrepresentedbytheproxy;

(i)whethersuchproxyhasanyvotingrights;

(iv)instruction(s)forvotingfororagainst,orabstainingfromvotingoneachresolutionas

statedintheagendaofthegeneralmeting;

(v)thedateofisuanceandexpiryoftheproxystatement;

(vi)thesignature(orseal)oftheprincipal.Iftheprincipalisacorporateshareholderora

shareholderofapartnershipenterprise,thesealofthecorporatentityorthepartnership

enterpriseshalbeafixed.

Theproxystatementshalindicatewhethertheproxymayvoteathis/herowndiscretionif

theshareholderdoesnotgivespecificinstructions.

Wheretheinstrumentapointingaproxyisignedbyanotherpersonauthorisedbythe

principal,thepowerofatorneyorotherauthorisationdocumentsauthorisedtobesignedshalbe

notarised.Thenotarisedpowerofatorneyorotherauthorisationdocumentsandtheinstrument

apointingaproxyshalbekeptathedomicileoftheCompanyoratotherplacesdesignatedin

thenoticeofthemeting.Iftheprincipalisalegalentity,itslegalrepresentativeorsuchperson

authorisedbyresolutionofitsBoardandotherdecision-makingbodyshalatendathe

Company’sgeneralmetingasarepresentative.Iftheprincipalisapartnershipenterprise,its

APENDIXVISUMARYOFTHEARTICLESOFASOCIATION

–VI-18–

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managingpartnerorthedelegateapointedbythemanagingpartner,orsuchpersonauthorizedby

aresolutionofthepartners’metingandotherdecision-makingbodyshalatendtheCompany’s

generalmetingofshareholdersasarepresentative.

Thecompanyshalberesponsibleforthepreparationofthemetingatendanceregister.The

metingatendanceregistershalstatethename(ornameofthentity),personalidentification

number,residentialadres,numberofshareswithvotingrightsheldorepresented,nameof

personbeingrepresented(ornameofthentity),andothermatersofthepersonsatendingthe

meting.

TheconvenerandthelawyerengagedbytheCompanyshaljointlyverifythelegalityof

shareholders’qualificationsacordingtotheregisterofshareholdersprovidedbythesecurities

registrationandsetlementinstitutionoftheplacewheretheCompany’sharesarelistedandthe

securitiesregulatoryrulesofthatplace,andrecordtheshareholders’names(ortitles)andthe

numberofsharesheldbythemwithvotingrights.Beforethechairmanofthemetinganounces

thenumberofshareholdersandproxiesatendingthemetingandthetotalnumberofsharesheld

bythemwithvotingrights,theregistrationofmetingshalbeterminated.

Whenthegeneralmetingisconvened,althedirectors,supervisorsandthesecretarytothe

BoardoftheCompanyshalbepresent,andthegeneralmanagerandotherseniormanagement

membershalatendthemeting.Incompliancewiththesecuritiesregulatoryrulesoftheplace

wheretheCompany’sharesarelisted,theaforementionedpersonsmayatendorparticipateinthe

metingviatheinternet,video,telephone,orothermethodswithequivalentefect.

ThegeneralmetingshalbepresidedoverbythechairmanoftheBoard.Wherethe

chairmanoftheBoardisunabletoperformorfailstoperformhis/herduties,morethanhalfofthe

directorshaljointlyelectadirectortopresideoversuchmeting.Ageneralmetingconvenedby

theSupervisoryComiteshalbepresidedoverbythechairmanoftheSupervisoryComite.

WherethechairmanoftheSupervisoryComiteisunabletoperformorfailstoperformhis/her

duties,morethanhalfofthesupervisorshaljointlyelectasupervisortopresideoversuch

meting.Ageneralmetingconvenedbyshareholdersthemselveshalbepresidedoverbya

representativelectedbytheconvenor.Ifwhenconveningageneralmeting,thechairmanofthe

metingisinviolationoftheserulesofprocedurescausingthegeneralmetingunabletobe

continued,subjectotheagrementbyoverhalfoftheatendingshareholderswithvotingrightsat

thegeneralmeting,thegeneralmetingmayelectapersonaschairmanofthemetingand

continuewiththemeting.

TheCompanyshalformulatetherulesofprocedureofthegeneralmetingtospecifyin

detailstheconveningandvotingproceduresofthegeneralmeting,includingnotice,registration,

deliberationofproposal,voting,votecounting,anouncementofvotingresults,formationof

APENDIXVISUMARYOFTHEARTICLESOFASOCIATION

–VI-19–

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resolutions,minutes,thesigningthereofandanouncement,aswelastheprinciplesof

authorizationbythegeneralmetingtotheBoard,ofwhichthecontentshalbeclearand

specific.TherulesofprocedureofthegeneralmetingshalbeananextotheArticlesandshal

beformulatedbytheBoardandaprovedathegeneralmeting.

TheBoardandtheSupervisoryComiteshalgivereportsontheirworkinthepastyearto

thegeneralmetingatheanualgeneralmetings.Besides,eachindependentdirectorshalalso

makeareportonhis/herwork.Theanualworkreportofindependentdirectorshalbedisclosed

athelatestwhentheCompanygivesnoticeofitsanualgeneralmetings.

Thedirectors,supervisors,seniormanagementmembershalmakereplyandexplanationto

alqueriesandproposalsoftheshareholdersathegeneralmeting.

Thechairmanofthemetingshalanouncethenumberofshareholdersandproxiespresent

athemetingandthetotalnumberofsharescaryingvotingrightsheldbythembeforevoting.

Thenumberofshareholdersandproxiespresentinthemetingandthetotalnumberofshares

caryingvotingrightsheldbythemshalbebasedontheregistrationforthemeting.

MinutesofthegeneralmetingshalbekeptbythesecretarytotheBoard.Theminuteshal

containthefolowingdetails:

(i)time,place,agendaofmetingsandnamesoftheconveners;

(i)thenamesofthechairmanofthemeting,thedirectors,supervisors,generalmanager

andotherseniormanagementmembersatendingorpresentathemeting;

(i)thenumberofatendingshareholdersandproxies,theirtotalnumberofshareswith

votingrightsandtheproportionoftheirsharestothetotalnumberoftheCompany’s

shares;

(iv)thereviewprocedures,keypointsofspeakersandresolutionresultsofeachproposal;

(v)theinquiryopinionsorecomendationsofshareholdersandtherepliesorelaborations

thereon;

(vi)thenamesoflawyers,votecountersandvotescrutiner;

(vi)othercontentsbeingrecordedintheminutesinacordancewiththerequirementsofthe

ArticlesofAsociation.

APENDIXVISUMARYOFTHEARTICLESOFASOCIATION

–VI-20–

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Theconvenorshalwaranthathecontentsoftheminutesaretrue,acurateandcomplete.

Thedirectors,supervisors,secretarytotheBoard,theconvenorortheirproxiesatendingthe

meting,thechairmanofthemetingshalsignontheminutes.Theminutes,recordofatendance

oftheshareholders,theproxystatementandvalidinformationononlineandotherwaysofvotings

shalbekeptaltogetherforaperiodofnotlesthan10years.Theconvenorshalensurethe

continuationofthegeneralmetinguntilafinalresolutionisreached.Intheventofspecial

reasonsuchasforcemajeurecausingtheinteruptionofthegeneralmetingornoresolutioncan

bemade,necesarymeasureshalbeadoptedtorestoretheconveningofthegeneralmetingat

thearliestposibleortodirectlyterminatethegeneralmetingandmakeanouncementina

timelymaner.TheconvenorshalathesametimereportothebranchoficeoftheChina

SecuritiesRegulatoryComisionandthestockexchangeatheplacewheretheCompanyis

domiciled.

VotingandResolutionsofGeneralMeting

Resolutionsofthegeneralmetingshalbedividedintordinaryandspecialresolutions.An

ordinaryresolutionofageneralmetingshalbepasedbyoverone-halfofthevotingrightsheld

bytheshareholders(includingproxiesthereof)presentathegeneralmeting.Aspecialresolution

ofageneralmetingshalbepasedbymorethantwo-thirdsofthevotingrightsheldbythe

shareholders(includingproxiesthereof)presentathegeneralmeting.

Thefolowingmatershalrequirethesanctionofanordinaryresolutionatageneral

meting:

(i)theworkingreportsoftheBoardandtheSupervisoryComite;

(i)plansfordistributionofprofitsandplansforecoveryoflosesproposedbytheBoard;

(i)theapointmentandremovalofthemembersoftheBoardandtheSupervisory

Comiteandtheiremunerationandmethodofpayment;

(iv)anualbudgetplanandfinalacountsoftheCompany;

(v)anualreportsoftheCompany;

(vi)othermatersexcepthoserequiredbythelaws,administrativeregulations,the

securitiesregulatoryrulesoftheplacewheretheCompany’sharesarelisted,orthe

ArticlesofAsociationtobeaprovedbyspecialresolution.

APENDIXVISUMARYOFTHEARTICLESOFASOCIATION

–VI-21–

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Thefolowingmatershalrequirethesanctionofaspecialresolutionatageneralmeting:

(i)theincreaseordecreaseinregisteredcapitaloftheCompany;

(i)thedemerger,spin-of,amalgamation,disolutionandliquidationoftheCompany;

(i)amendmentstotheArticlesofAsociation;

(iv)thepurchaseandisposalofmaterialasetsbytheCompanywithinoneyearor

guaranteamountexceding30%oftheCompany’slatestauditedtotalasets;

(v)theshareincentiveschemes;

(vi)othermatersrequiredbythelaws,administrativeregulations,thesecuritiesregulatory

rulesoftheplacewheretheCompany’sharesarelisted,ortheArticlesofAsociation

tobeaprovedbyspecialresolutions,andwhichavebendeterminedbyordinary

resolutionsathegeneralmetingtohavesignificantimpactontheCompany.

Shareholders(includingproxiesthereof)havetherightospeakatgeneralmetingsand

exercisetheirvotingrightsbasedonthenumberofvotingsharestheyrepresent.Eachshareis

entitledtonevote,unlesindividualshareholdersarerequiredtoabstainfromvotingon

individualmatersinacordancewiththesecuritiesregulatoryrulesoftheplacewherethe

Company’sharesarelisted.Whenvoting,ashareholder(includingproxiesthereof)whohastwo

ormorevotingrightsisnotrequiredtocastalofhis/hervotingrightseitherinfavoroforagainst

aresolution.

Whenconsideringthematerialmatersafectingtheinterestsofminorityinvestorsathe

generalmeting,thevotesbyminorityinvestorshalbecountedseparately,andtheresultsof

suchseparatevotecountingshalbepubliclydisclosedinatimelymaner.

ThesharesoftheCompanyheldbytheCompanydonotcaryvotingrights,andshalnotbe

countedinthetotalnumberofvotingsharesrepresentedbyshareholdersatendingageneral

meting.

ShareholderswhopurchasethevotingsharesoftheCompanyinviolationoftheprovisionsof

Clause1andClause2ofArticle63oftheSecuritiesLawshalnotexercisethevotingrightofthe

sharesthatexcedtheprescribedratiowithin36monthsafterthepurchase,andsuchnumbershal

notbecountedinthetotalnumberofvotingsharesrepresentedbyshareholdersatendingageneral

meting.

APENDIXVISUMARYOFTHEARTICLESOFASOCIATION

–VI-22–

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Inacordancewiththeaplicablelaws,regulationsandtheHongKongListingRules,ifany

shareholderisrequiredtoabstainfromvotingonaresolutionmater,oranyshareholderis

restrictedtovotingonlyfororonlyagainstit,thenumberofvotescastbyoronbehalfofsuch

shareholderinviolationoftherelevantprovisionsorestrictionshalnotbeincludedinthetotal

numberofvotingshares.

TheBoard,independentdirectors,shareholdersholdingmorethan1%ofvotingsharesor

investorprotectionagenciesestablishedinacordancewithlaws,administrativeregulations,the

securitiesregulatoryrulesoftheplacewheretheCompany’sharesarelisted,orequirementsof

theCSRCmaypubliclysolicitvotingrightsfromshareholders.Informationincludingthespecific

votingintentionshalbefulydisclosedtotheshareholdersfromwhomvotingrightsarebeing

solicited.Considerationordefactoconsiderationforsolicitingshareholders’votingrightsis

prohibited.TheCompanyshalnotimposeanyminimumshareholdinglimitforsolicitingvoting

rights,exceptforstatutoryconditions.

ThetransactionbetwentheCompanyandtherelatedparties(exceptforguarantesprovided

bytheCompany)withthetransactionamountacountingforover1%oftheCompany’slatest

auditedtotalasetsormarketvalue,andexcedingRMB30milion,inaditiontotimely

disclosure,thecompanyshouldprovidewithanauditorasesmentreportinrespectofthesubject

materofthetransactionisuedbyasecuritieserviceagencyqualifiedtocaryoutsecuritiesand

futuresrelatedbusineses.Thetransactionshalobtaintheconsentofmorethanhalfofal

independentdirectorsbeforebeingsubmitedtotheBoardfordeliberation,andafterbeing

aprovedbytheBoard,itshalbesubmitedtothegeneralmetingfordeliberation.

Relatedtransactionsrelatedtodailyoperationsmaybexemptfromauditorasesment.

WhereotherwiseprovidedbythesecuritiesregulatoryrulesoftheplacewheretheCompany’s

sharesarelisted,suchprovisionshalprevail.

Whenthegeneralmetingdeliberatesonmatersrelatedtorelatedtransactions,related

shareholdershalnotparticipateinthevoting,andthenumberofvotingsharestheyrepresent

shalnotbeincludedinthetotalnumberofvalidvotes.Theanouncementoftheresolutionofthe

generalmetingshalfulydisclosethevotingsituationofnon-relatedshareholders.Whenthe

generalmetingmakesaresolutiononmatersrelatedtorelatedtransactions,relatedshareholders

shaltaketheinitiativetoabstainfromvotingandnotparticipateinthevoting;related

shareholdershalnotactasproxiesforothershareholderstoexercisetheirvotingrights;if

relatedshareholdersdonotaketheinitiativetoabstainfromvoting,othershareholdersatending

themetinghavetherightorequestrelatedshareholderstoabstainfromvoting.Afterelated

shareholdersabstainfromvoting,othershareholdershalvoteacordingtothevotingrightsthey

APENDIXVISUMARYOFTHEARTICLESOFASOCIATION

–VI-23–

---

hold,andpascorespondingresolutionsinacordancewiththeprovisionsoftheArticlesof

Asociation;theabstentionandvotingproceduresofrelatedshareholdershalbenotifiedbythe

chairmanofthegeneralmetingandrecordedintheminutes.

Aresolutionofthegeneralmetingonmatersrelatedtorelatedtransactionshalonlybe

validifitisaprovedbymorethanhalfofthevotingrightsheldbynon-relatedshareholders

presentathegeneralmeting.However,iftherelatedtransactionmatersinvolvematersthat

requireadoptionbyaspecialresolutionastipulatedintheArticlesofAsociation,theresolution

ofthegeneralmetingshalonlybevalidifitisaprovedbymorethantwo-thirdsofthevoting

rightsheldbynon-relatedshareholderspresentathegeneralmeting.

UnlestheCompanyisinacrisisorunderanyotherspecialcircumstances,theCompany

shalnotenterintoanycontractwithapersonotherthanaDirector,generalmanager,andany

otherseniormanagementmembertowhomthemanagementofthewholeorasignificantpartof

theCompany’sbusinesisentrusted,exceptwiththeaprovalofthegeneralmetingbyaspecial

resolution.

ThelistofcandidatesforDirectorsandSupervisorshalbesubmitedtothegeneralmeting

forvotingintheformofaproposal.Thefolowingpartieshavetherightonominatecandidates

forDirectorsandSupervisors:

(i)NominationofcandidatesforDirectorsagredbytheBoard;

(i)NominationofcandidatesforShareholderepresentativeSupervisorsagredby

SupervisoryComite;

(i)Shareholdersholdingindividualyorcolectivelymorethan3%ofthesharesofthe

Companyhaverightonominatecandidatesfornon-independentDirectorsand

ShareholderepresentativeSupervisors;

(iv)Shareholdersholdingindividualyorcolectivelymorethan1%ofthesharesofthe

CompanyhaverightonominatecandidatesforindependentDirectors;

(v)ThemployerepresentativeSupervisorsaredemocraticalynominatedandelectedby

theCompany’semployesathemployerepresentativemetings,employemetings

orotherwise.

Incaseofthecircumstancespecifiedinitem(i)(iv)above,aftertheCompanyisuesthe

noticeofthegeneralmetingforthelectionofDirectorsandSupervisors,Shareholderswith

nominationrightsmay,inacordancewiththeprovisionsoftheArticlesofAsociation,propose

APENDIXVISUMARYOFTHEARTICLESOFASOCIATION

–VI-24–

---

candidatesforDirectorsandSupervisorspriortotheconveningofgeneralmeting,whichshalbe

submitedtothegeneralmetingforconsiderationafterbeingreviewedbytheBoardin

acordancewiththeproceduresforamendingproposalsforthegeneralmeting.

WhenthegeneralmetingvotesonthelectionofDirectorsandSupervisors,ifanysingle

ShareholderoftheCompanyandhis/herpartiesactinginconcerthaveinterestinotlesthan

30%ofshares,acumulativevotingsystemshouldbeadopted,andwherethegeneralmeting

electstwormoreindependentDirectors,suchsystemshouldbeadoptedaswel.Thecumulative

votingsystemasmentionedabovereferstothesystemforelectingDirectorsorSupervisorsina

generalmetingwherethevotingrightofeachshareshalbequaltothenumberofDirectorsor

Supervisorstobelected,thevotingrightownedbyaShareholdermaybeusedinacentralized

maner.TheBoardshalpublishananouncementoShareholdersprovidinginformationonthe

biographicaldetailsandbasicparticularsofthecandidatesforDirectorsorSupervisors.

Exceptforthecumulativevotingsystem,alproposalsathegeneralmetingshalbevoted

onitembyitem,whenthereismorethanoneproposalforaparticularmater,votingshouldbe

conductedoneachoftheproposalsacordingtotheirchronologicalorderofbeingproposed.

Unlesthegeneralmetingisadjournedoraresolutioncanotbepaseduetospecialreasons

suchasforcemajeure,thegeneralmetingwilnotsetasideorefrainfromvotingonthe

proposals.

Whenaproposalisconsideredinageneralmeting,nomodificationtotheproposalwilbe

made,otherwisetherelevantchangeshalbedemedanewproposalandcanotbevotedinthe

curentgeneralmeting.

Thesamevotingrightmayonlyelectoneofthevotingmethods,on-site,internetorother

votingmethods.Incaseofrepeatvotingbythesamevotingright,onlythefirstvoteisvalid.

Votingathegeneralmetingshalbetakenbywayofregisteredpol.

Beforevotingonaproposalinthegeneralmeting,twoShareholderepresentativeshalbe

electedtoparticipateinvotingcountingandactascrutiners.Wherethematerstobeconsidered

arerelatedtotheShareholders,suchShareholdersandproxiesarenotalowedtoparticipatein

votecountingandscrutinizingproces.Whenaproposalisvotedinageneralmeting,thevote

countingandscrutinizingproceshalbejointlyresponsibleandperformedbyalawyer,a

ShareholderepresentativeandaSupervisorepresentative,thevotingresultshouldbeanounced

on-siteandthevotingresultofaresolutionshalberecordedintheminutesofmeting.A

ShareholderoftheCompanyorhis/herproxywhohasvotedthroughtheinternetorothervoting

methodshalbentitledtoinspecthis/herownvotingresulthroughthecorespondingvoting

system.

APENDIXVISUMARYOFTHEARTICLESOFASOCIATION

–VI-25–

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Theclosingtimeofaphysicalgeneralmetingmustnotbearlierthanthatofinternetor

othermethods.Thechairmanofthemetingshalanouncethevotingforeachproposalandits

result,andshaldeclarewhethertheproposalhasbenaprovedacordingtothevoting.Before

anouncingtheoficialvotingresult,therelatedpartiesincludingtheCompany,votecounting

persons,scrutiners,substantialShareholdersandinternetserviceprovidersinvolvedinthe

physicalgeneralmeting,internetandothervotingmethodshalhaveadutyofconfidentialityon

thevotingdetails.

Shareholderswhoatendthegeneralmetinginpersonshalexpresoneofthefolowing

indicationsaboutheproposalsubmitedforvoting:for,againstorabstain.Securitiesregistration

andsetlementinstitutionsarethenominalholdersofsharestransactedthroughthemutual

conectionmechanismbetwenstockmarketsinMainlandChinandHongKong,exceptfor

reportingonindicationsexpresedbybeneficialShareholders.Empty,eroneousorilegiblebalot

papersanduncastbalotpapersaredemedasabstainedfromvotingbythevoters,andthevoting

resultinrespectofthenumberofsharesheldbysuchvotersarecountedas“abstention”.

Ifthechairmanofthemetinghasanydoubtsabouthevotingresultofthesubmited

resolution,he/shemayarangere-countingofthevotes.Ifthechairmanofthemetingdoesnot

arangere-countingofthevotes,Shareholdersorproxiesatendingthemetingwhodisentfrom

theresultanouncedbythechairmanofthemetingshalbentitledtorequestre-countingof

votesimediatelyafteranouncementofthevotingresult,inwhichcasethechairmanofthe

metingshalimediatelyarangere-countingofthevotes.

Resolutionsofageneralmetingshalbeanouncedinatimelymaner,theanouncement

shalsetouthenumberofShareholdersandproxiesatendingthemeting,thetotalnumberof

sharesheldwithvotingrightsandthepercentageinthetotalnumberofsharesoftheCompany

withvotingright,methodofvoting,votingresultofeachproposalandthedetailsofeach

resolutionwhichasbenpased.

Ifanyproposalhasnotbenpasedormodificationhasbenmadetoaresolutionofthe

precedingeneralmetingbythecurentgeneralmeting,aspecialnoteshouldbecontainedin

theresolutionsofthegeneralmeting.

AfterthegeneralmetinghaspasedtheresolutionsonthelectionproposalforDirectors

andSupervisors,thenewlyelectedDirectorsandSupervisorshaltakeoficeonthedatewhen

thelectionproposalisaprovedbythegeneralmetingthroughvoting.

Whenageneralmetinghaspasedresolutionsonthedistributionofcashdividends,bonus

sharesorincreaseinsharecapitalbyconversionofcapitalreserves,theCompanyshalimplement

thespecificproposalwithin2monthsafterconclusionofthegeneralmeting.Ifthespecific

APENDIXVISUMARYOFTHEARTICLESOFASOCIATION

–VI-26–

---

proposalcanotbeimplementedwithin2monthsduetotherequirementsoflaws,regulationsand

securitiesregulatoryrulesoftheplacewheretheCompanyislisted,theimplementationdatemay

beadjustedacordinglyincompliancewiththerelevantregulationsandasapropriate.

BOARD

Directors

DirectorsoftheCompanyincludexecutiveDirectors,non-executiveDirectorsand

independentDirectors.Non-executiveDirectorsrefertoDirectorswhodonotcaryoutoperation

andmanagementdutiesintheCompany.IndependentDirectorsrefertoDirectorswhomethe

requirementsoftheArticlesofAsociation.DirectorsoftheCompanyarenaturalpersons,anda

personshalnotserveasaDirectoroftheCompanyifanyofthefolowingcircumstancesaplies:

(i)apersonwhohasnocapacityorhasrestrictedcapacityforcivilconduct;

(i)apersonwhohasbensentencedtocriminalpunishmentforcoruption,bribery,

embezlementofproperty,misapropriationofpropertyordisruptionofthesocialist

marketeconomicorder;orhasbendeprivedofpoliticalrightsbecauseofcomiting

anofence,ineachcasewherelesthan5yearshavelapsedsincethexpirationofthe

executionperiod;

(i)apersonwhoisaformerdirector,factorydirectorormanagerofacompanyoran

enterprisewhichwasinsolventandliquidatedandwhowaspersonalyliableforthe

insolvencyofsuchcompanyorenterprise,wherelesthan3yearshavelapsedsince

thedateofthecompletionoftheinsolvencyandliquidationofsuchcompanyor

enterprise;

(iv)apersonwhowasthelegalrepresentativeofacompanyoranenterprisewhosebusines

licensehasbenrevokedandwasorderedtoceaseitsbusinesduetotheviolationof

lawsandwhoispersonalyliablefortherevocation,wherelesthan3yearshave

elapsedsincethedateoftherevocationofthebusineslicenseofsuchcompanyor

enterprise;

(v)apersonwhohasarelativelylargeamountofpersonalindebtedneswhichisoverdue

andoutstanding;

(vi)apersonwhohasbenbanedfromenteringthesecuritiesmarketbytheCSRCand

whosetermhasnotyetexpired;

APENDIXVISUMARYOFTHEARTICLESOFASOCIATION

–VI-27–

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(vi)apersonwhohasbenpubliclydeterminedbythestockexchangetobeunsuitableto

serveasadirectorofalistedcompany;

(vi)Othercontentstipulatedbylaws,administrativeregulations,departmentalrules,

securitiesregulatoryrulesoftheplacewheretheCompany’sharesarelisted.

Anyelection,apointmentorengagementofaDirectorinviolationofaforementioned

provisionshalbeinvalid.IfaDirectorfalsunderthecircumstancestipulatedaboveduring

his/hertermofofice,theBoardshalremovesuchDirectorfromhis/herofice.

TheDirectorshalbelectedoreplacedbythegeneralmeting,andonthepremiseof

complyingwiththerelevantlaws,regulationsandsecuritiesregulatoryrulesoftheplacewherethe

Company’sharesarelisted,theShareholdershalhavepowerbyordinaryresolutiontoremove

anyDirector(includingamanagingdirectororanyotherexecutiveDirector)athegeneral

metingbeforethexpirationofhis/hertermofofice;howeversuchremovalshalnotprejudice

toanyclaimfordamagesunderanycontractbysuchDirector.ThetermofoficeofaDirectoris

threyearsanduponthexpirationoftheterm,itmayberenewableuponre-electionin

acordancewiththesecuritiesregulatoryrulesoftheplacewheretheCompany’sharesarelisted.

ThetermsofoficeofindependentDirectorshalbethesameasthatofotherDirectorsof

theCompany,anduponexpirationofthetermofofice,theymaybere-electedforconsecutive

terms,providedthatsuchtermshalnotexcedsixyears.AnyindependentDirectorwhohas

servedtheCompanyforsixconsecutiveyearshalnotbenominatedasacandidatefor

independentDirectoroftheCompanywithin36monthsfromthedateoftheocurenceofsuch

fact.ForthosewhohaveservedasindependentDirectorspriortotheinitialpublicoferingand

listing,theirtermofoficeshalbecalculatedconsecutively.ADirector’stermofoficeshal

comencefromthedateonwhiche/shetakesoficeanduptothexpiryofthecurentermof

oficeoftheBoard.If,uponthexpiryofaDirector’stermofofice,anewDirectorcanotbe

electedonatimelybasis,beforethere-electedDirectorstartshis/hertermofofice,suchDirector

shalcontinuetoperformhis/herdutiesasDirectorinacordancewithlaws,administrative

regulations,departmentalrules,securitiesregulatoryrulesoftheplacewheretheCompany’s

sharesarelistedandtheprovisionsoftheArticlesofAsociation.Noemployerepresentativesare

tobeapointedasDirectorsbytheCompany.Thegeneralmanageroranyothersenior

managementmembercanconcurentlyserveasaDirector,buthetotalnumberofDirectorswho

holdthepositionsofthegeneralmanagersorotherseniormanagementmembershalnotbemore

than1/2ofthetotalnumberofDirectorsoftheCompany.

APENDIXVISUMARYOFTHEARTICLESOFASOCIATION

–VI-28–

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TheDirectorshalcomplywithlaws,administrativeregulations,securitiesregulatoryrules

oftheplacewheretheCompany’sharesarelistedandtheArticlesofAsociation,andshalfulfil

thefiduciaryobligationtotheCompanyasfolows:

(i)nototakeadvantageofhis/herfunctionsandpowerstoaceptbribesorotherilegal

income,andnotomisapropriatethepropertyoftheCompany;

(i)notomisapropriatethefundsoftheCompany;

(i)notodepositheCompany’sasetsorfundsinanacountopenedinhis/herowname

orinthenameofanyotherindividual;

(iv)notolendtheCompany’sfundstothersorprovideguarantesforotherswiththe

Company’spropertyinviolationoftheprovisionsoftheArticlesofAsociationand

withoutheaprovalofthegeneralmetingortheBoard;

(v)notoenterintoanycontractortransactionwiththeCompanyinviolationofthe

provisionsoftheArticlesofAsociation,orwithoutheaprovalofthegeneralmeting;

(vi)nototakeadvantageofhis/herpositiontosekbusinesoportunitiesthatshould

belongtotheCompanyforhimself/herselforothers,orengageinbusinesimilarto

thatoftheCompanyforhimself/herselforothers,withoutheaprovalofthegeneral

meting;

(vi)notoaceptcomisionsfromtheCompany’stransactionsforhis/herownbenefit;

(vi)notodisclosethesecretsoftheCompanywithoutauthorization;

(ix)nototakeadvantageofhis/herafiliationtoharmtheinterestsoftheCompany;

(x)otherfiduciaryobligationstipulatedinlaws,administrativeregulations,departmental

rules,securitiesregulatoryrulesoftheplacewheretheCompany’sharesarelistedand

theArticlesofAsociation.

TheincomeobtainedbyaDirectorinviolationoftheaforementionedprovisionshalbe

returnedtotheCompany.IfitcausesanylosestotheCompany,he/sheshalbeliablefor

compensation.

APENDIXVISUMARYOFTHEARTICLESOFASOCIATION

–VI-29–

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TheDirectorshalcomplywithlaws,administrativeregulations,securitiesregulatoryrules

oftheplacewheretheCompany’sharesarelistedandtheArticlesofAsociation,andbearthe

folowingresponsibilitiesofdiligencetotheCompany:

(i)toexercisetherightsconferedbytheCompanywithduediscretion,careandiligence

toensurethebusinesoperationsoftheCompanycomplywiththerequirementsofPRC

laws,administrativeregulationsandrelevantPRCeconomicpoliciesandarenotbeyond

thebusinescopespecifiedinthebusineslicense;

(i)totreatalShareholdersfairly;

(i)tokepabreastoftheCompany’sbusinesoperationandmanagement;

(iv)tosignwritenconfirmationsoftheCompany’speriodicreports,toensurethathe

informationdisclosedbytheCompanyistrue,acurateandcomplete;

(v)toprovidethestatusreportsandinformationtotheSupervisoryComitetruthfuly,

andnotohindertheSupervisoryComiteorSupervisorsfromexercisingtheir

powers;

(vi)otheresponsibilitiesofdiligencestipulatedinlaws,administrativeregulations,

departmentalrules,securitiesregulatoryrulesoftheplacewheretheCompany’shares

arelistedandtheArticlesofAsociation.

ADirectorwhofailstoatendtwoconsecutivemetingsoftheBoardinpersonortodelegate

otherDirectorstoatendthemetingsonhis/herbehalfshalbedemedtobeincapableof

performinghis/herduties,andtheBoardshalproposetothegeneralmetingtoremovesuch

Director.SubjectothesecuritiesregulatoryrulesoftheplacewheretheCompany’sharesare

listed,aDirectorwhoatendsametingoftheBoardbyinternet,video,telephoneorothermeans

withequivalentefectshalalsobedemedtobeatendingthemetinginperson.

ADirectormayresignbeforethexpiryofhis/hertermofofice.ADirectorwhoresigns

shalsubmitawritenresignationreportotheBoard.TheBoardshaldisclosetherelevant

resignationwithin2daysorwithintheperiodrequiredbythesecuritiesregulatoryrulesofthe

placewheretheCompany’sharesarelisted.IntheventhatheBoardoftheCompanyfals

belowthequoruminimumduetoaDirector’sresignation,orintheventhatheproportionof

independentDirectorsontheBoardoftheCompanyoritspecializedcomitesdoesnotcomply

withlaws,regulations,securitiesregulatoryrulesoftheplacewheretheCompany’sharesare

listedortheprovisionsoftheArticlesofAsociationduetotheresignationofanindependent

Director,orintheventhathereisnoacountingprofesionalamongtheindependentDirectors,

APENDIXVISUMARYOFTHEARTICLESOFASOCIATION

–VI-30–

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theresignationreportofsuchDirectorshalnotakefectuntilthesucesorfilsthevacancy

arisingfromhis/heresignation.Beforetheresignationreportakesefect,theresigningDirector

shalcontinuetoperformhis/herdutiesinacordancewithrelevantlaws,regulationsand

securitiesregulatoryrulesoftheplacewheretheCompany’sharesarelistedandtheprovisionsof

ArticlesofAsociation,unlesotherwiseprovidedbylaws,regulationsandsecuritiesregulatory

rulesoftheplacewheretheCompany’sharesarelisted.TheCompanyshalcompletethe

by-electionwithin60daysfromthedatewhentheDirectororindependentDirectorsubmitsthe

resignationandensurethathecompositionoftheBoardanditspecialcomitescomplywith

laws,regulations,securitiesregulatoryrulesoftheplacewheretheCompany’sharesarelisted

andtheprovisionsofArticlesofAsociation.Exceptasprovidedabove,theresignationofa

DirectorshalcomeintoforceuponthedeliveryoftheresignationreportotheBoard.

UponaDirector’sresignationbecomesefectiveorhis/hertermofoficexpires,heorshe

shalcompletealofthehandoverprocedureswiththeBoard,andhisorherfiduciaryobligations

totheCompanyandtheShareholdershalnotnecesarilybedischargedafterthexpirationof

his/hertermofofice.His/herobligationtomaintaintheconfidentialityoftheCompany’strade

secretshalremaininefectafterthexpirationofhis/hertermofoficeuntilsuchsecrets

becomepublicinformation.Thedurationoftheotherobligationshalbedeterminedonan

equitablebasis,dependingonthelengthoftimebetwentheocurenceoftheventandthe

departurefromofice,andthecircumstancesandconditionsunderwhichtherelationshipwiththe

Companyisterminated.

WhereitisnotprescribedbytheArticlesofAsociationorwithouthelawfulauthorization

oftheBoard,noDirectorshalactonbehalfoftheCompanyortheBoardinhis/herpersonal

capacity.WhereaDirectoractsinhis/hercapacity,suchDirectorshaldeclareinadvancehis/her

positionandidentityincircumstanceswhereathirdpartywouldreasonablybelievethatsuch

DirectorisactingonbehalfoftheCompanyortheBoard.

ADirectorwhoviolateslaws,administrativeregulations,departmentalrules,securities

regulatoryrulesoftheplacewheretheCompany’sharesarelistedortheprovisionsofthe

ArticlesofAsociationinthecourseofperformingdutiesoftheCompanyandcauseslosestothe

Companyshalbeliableforcompensation.

Thetermsofofice,nominationandelectionprocedures,powersandresponsibilitiesofthe

independentDirectorsandotherelatedmatershalbeimplementedinacordancewithlaws,

securitiesregulatoryrulesandtherelevantregulationsofthestockexchangeoftheplacewhere

theCompany’sharesarelisted.ThereshouldbethreormoreindependentDirectors,andsuch

numbershalbenolesthanone-thirdoftheBoardasawhole.Aditionaly,atleastone

independentDirectorshalposesproperprofesionalqualificationsorproperacountingor

finance-relatedmanagementexpertiseasrequiredbythesecuritiesregulatoryrulesoftheplace

APENDIXVISUMARYOFTHEARTICLESOFASOCIATION

–VI-31–

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wheretheCompany’sharesarelisted.OneindependentDirectorshalbepermanentlyresidentin

HongKong.AlindependentDirectorshalbeindependentasrequiredbysecuritiesregulatory

rulesoftheplacewheretheCompany’sharesarelisted.

Board

TheCompanyshalestablishaBoardwhichshalbeacountabletothegeneralmeting.

TheBoardshalconsistofnineDirectors,includingthreIndependentDirectors.TheBoard

shalhaveachairmanwithnovicechairman.

TheBoardshalexercisethefolowingfunctionsandpowers:

(i)toconvenegeneralmetingstopresentheirworkreportsatsuchmetings;

(i)toexecuteresolutionsofthegeneralmetings;

(i)todecideonthebusinesandinvestmentplansoftheCompany;

(iv)topreparetheanualfinancialbudgetsandfinalacountsplansoftheCompany;

(v)topreparetheprofitdistributionplanandlosmakeuplanoftheCompany;

(vi)toprepareplansfortheincreaseoreductionoftheregisteredcapitaloftheCompany,

theisuanceofbondsorothersecuritiesandthelisting;

(vi)toformulateplansformaterialacquisitions,purchaseofsharesoftheCompany,or

merger,division,disolutionandchangeofcorporateformoftheCompany;

(vi)todecideonexternalinvestment,acquisitionandisposalofasets,externalguarante,

entrustedfinancialmanagement,relatedtransactionsandexternaldonationswithinthe

scopeoftheArticlesofAsociationandtheauthorizationgrantedbythegeneral

meting;

(ix)toresolveonthestablishmentofinternalmanagementorganizationsoftheCompany;

(x)toapointordismistheCompany’sgeneralmanagerandbasedonthenominationby

theChairman,toapointordismisthesecretarytotheBoard;toapointordismisthe

Company’sdeputygeneralmanager,chiefinancialoficer(thefinancialcontroler),

APENDIXVISUMARYOFTHEARTICLESOFASOCIATION

–VI-32–

---

chieftechnologyoficerandotherseniormanagementmembers(excepthesecretaryto

theBoard)asnominatedbythegeneralmanager;andeterminetheiremunerationsand

rewardsandpenalties;

(xi)tosetupthebasicmanagementsystemoftheCompany;

(xi)toformulatetheproposalsforanyamendmentotheArticlesofAsociation;

(xi)tomanagethedisclosureofinformationbytheCompany;

(xiv)toproposetogeneralmetingstheapointmentorchangeoftheacountingfirm

responsiblefortheauditingoftheCompany;

(xv)tolistentotheworkreportofthegeneralmanageroftheCompanyandexaminethe

generalmanager’swork;

(xvi)subjectocompliancewithsecuritiesregulatoryrulesoftheplacewheretheCompany’s

sharesarelisted,todecideontheacquisitionofthesharesoftheCompany(dueto

circumstancesprovidedintheArticlesofAsociation);

(xvi)Otherfunctionsandpowersauthorizedbythelaws,administrativeregulations,

departmentalrules,securitiesregulatoryrulesoftheplacewheretheCompany’sShares

arelistedortheArticlesofAsociation.

TheBoardoftheCompanyestablishesanAuditComite,aStrategyComite,a

NominationComiteandaRemunerationandApraisalComite.Specialcomiteshal

reportotheBoardandperformtheirdutiesinacordancewiththeArticlesofAsociationand

authorizationoftheBoard.ProposalshalbesubmitedtotheBoardforconsiderationand

decision.ThemembersofspecialcomiteshalbealcomposedofDirectors.Amongthem,

IndependentDirectorshalbethemajorityintheAuditComite,NominationComiteand

RemunerationandApraisalComite,andserveastheconvener.TheconveneroftheAudit

Comiteshalbeanacountingprofesional.TheBoardshalberesponsibleforformulatingthe

workingproceduresofspecialcomitesandregulatingtheoperationofspecialcomites.

Matersbeyondthescopeauthorizedbythegeneralmetingshalbesubmitedtothegeneral

metingforconsiderationandecision.

TheBoardoftheCompanyshalexplainthenon-standardauditingopinionsonthefinancial

reportsoftheCompanyisuedbyacertifiedpublicacountantothegeneralmeting.

APENDIXVISUMARYOFTHEARTICLESOFASOCIATION

–VI-33–

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TheBoardshalformulatetherulesofproceduresoftheBoardmetingstoensurethe

implementationofthegeneralmeting’sresolutions,improvetheworkeficiencyandguarante

scientificdecision-making.Theseruleshalspecifytheproceduresfortheconveningofand

votingatheBoardmetings,andshalbeapendedtotheArticlesofAsociation.Theyshalbe

draftedbytheBoardforaprovalbythegeneralmeting.

TheBoardshaldeterminetheauthorityofexternalinvestment,acquisitionandisposalof

asets,asetmortgage,externalguarante,entrustedfinancialmanagement,relatedtransactions,

externaldonations,andestablishstrictreviewandecision-makingprocedures;majorinvestment

projectshalbereviewedbyrelevantexpertsandprofesionalsandreportedtothegeneral

metingforaproval.

Exceptasotherwiseprovidedbythesecuritiesregulatoryrulesoftheplacewherethe

Company’sharesarelisted,anytransactionenteredintobytheCompany(excludingtheprovision

ofguarantes)thatmetstherelevantcriteriashalbesubmitedtotheBoardforconsideration.

ExceptasotherwiseprovidedbythesecuritiesregulatoryrulesoftheplacewheretheCompany’s

sharesarelisted,whentherelevantcriteriaforthetransactionmatersarenotmet,thedecision

shalbemadebythegeneralmanager.

WhentheBoardconsiderstransactions,relatedtransactions,externalguarantesand

borowings,itshouldestablishstrictreviewandecision-makingprocedures;Majorinvestment

projectsexcedingtheaboveauthorityshalbereviewedbyrelevantexpertsandprofesionalsand

submitedtothegeneralmetingforaproval.

ThexternalguarantethatarenotconsideredandaprovedbytheBoardinacordancewith

theaprovalauthorityandreviewprocedureshalbeinvalid.Whereanyexternalguarante

consideredandaprovedinviolationoftheaprovalauthorityoreviewprocedurescausesalos

totheCompanyortheshareholders,therelatedDirectors,seniormanagementmembersorany

otherpersonheldliableshalbeartheliabilityfordamagesinacordancewiththelaws.

GeneralManagerandOtherSeniorManagementMembers

TheCompanyhasonegeneralmanager,whomshalbeapointedordismisedbytheBoard.

Thegeneralmanager,deputygeneralmanager,chiefinancialoficer(thefinancial

controler),chieftechnologyoficerandsecretarytotheBoardareseniormanagementmembersof

theCompany.

ThecircumstancesofdisqualificationofDirectorsprescribedintheArticlesofAsociation

shalalsobeaplicabletoseniormanagementmembers.

APENDIXVISUMARYOFTHEARTICLESOFASOCIATION

–VI-34–

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ThefiduciarydutiesandutiesofdiligenceoftheDirectorsascontainedintheArticlesof

Asociationshalalsobeaplicabletoseniormanagementmembers.

ThegeneralmanagershalbeacountabletotheBoardandexercisethefolowingfunctions

andpowers:

(i)tobeinchargeoftheproduction,operationandmanagementoftheCompany,to

organizetheimplementationoftheresolutionsoftheBoard,andtoreporthis/herworks

totheBoard;

(i)torganizetheimplementationoftheCompany’sanualbusinesplansandinvestment

plans;

(i)todecideontransactionmatersbelowthestandardsthatrequiresubmisiontothe

BoardforconsiderationastipulatedinArticle115totheArticlesofAsociation;

(iv)todraftplansforthestablishmentoftheCompany’sinternalmanagementorganization;

(v)todraftheCompany’sbasicmanagementsystem;

(vi)toformulatethespecificrulesandregulationsoftheCompany;

(vi)torecomendorproposetotheBoardapointmentordismisalofdeputygeneral

manager,chiefinancialoficer(thefinancialcontroler),chieftechnologyoficerand

otherseniormanagementmembers(excepthesecretarytotheBoard);

(vi)todecideontheapointmentordismisalofmanagementpersonelotherthanthose

requiredtobeapointedordismisedbytheBoard;

(ix)toconveneandpresideoverthegeneralmanager’soficemetings;

(x)toexercisethefunctionsandpowerstipulatedintheworkrulesofthegeneral

manager;

(xi)toexerciseotherfunctionsandpowersconferedbytheArticlesofAsociationorthe

Board.

ThegeneralmanagershalatendtheBoardmetings.

APENDIXVISUMARYOFTHEARTICLESOFASOCIATION

–VI-35–

---

Ifanyseniormanagementmemberhasviolatedtheprovisionsofanylaws,administrative

regulations,departmentalrules,securitiesregulatoryrulesoftheplacewheretheCompany’s

sharesarelistedortheArticlesofAsociationwhileperforminghis/herdutiesandcausingloses

totheCompany,he/sheshalbeliableforcompensation.

SeniormanagementmembersoftheCompanyshalperformtheirdutieshonestly,andprotect

thebestinterestsoftheCompanyandaltheshareholders.Seniormanagementmembersofthe

Companyshalbeliableforcompensationinacordancewiththelawsforanydamagecausedto

theinterestsoftheCompanyandpublicshareholdersasaresultoftheirfailuretoperformduties

honestlyorviolationoftheirfiduciaryduties.

SUPERVISORYCOMITE

Supervisors

ThecircumstancesofdisqualificationofDirectorsprescribedintheArticlesofAsociation

shalalsobeaplicabletotheSupervisors.NoDirector,generalmanager,orothersenior

managementmembershalconcurentlyholdthepositionofaSupervisor.

ThetermofoficeofeachSupervisorshalbeaperiodofthreyears,renewableupon

re-election.

IfthetermofoficeofaSupervisorexpiresbutrelectionisnotmaderesponsivelyorifany

Supervisoresignsduringhis/hertermofoficesothathemembershipoftheSupervisory

Comitefalshortofthequorum,thesaidSupervisorshalcontinueperformingthedutiesas

Supervisorpursuantolaws,administrativeregulations,securitiesregulatoryrulesoftheplace

wheretheCompany’sharesarelistedandtheArticlesofAsociationuntilanewSupervisoris

elected.

SupervisorshalnotusetheasociatedrelationshiptodamagetheinterestsoftheCompany;

otherwise,theyshalbeliableforcompensationforanylosincuredtotheCompany.

IfaSupervisorhasviolatedtheprovisionsofanylaws,administrativeregulations,

departmentalrules,securitiesregulatoryrulesoftheplacewheretheCompany’sharesarelisted

ortheArticlesofAsociationwhileperforminghis/herdutiesandcausinglosestotheCompany,

he/sheshalbeliableforcompensation.

APENDIXVISUMARYOFTHEARTICLESOFASOCIATION

–VI-36–

---

SupervisoryComite

TheCompanyshalhaveaSupervisoryComite.TheSupervisoryComiteshalconsist

ofthreSupervisors.TheSupervisoryComiteshalapointachairman,whoshalbelected

bymorethanhalfofalSupervisors.

ThechairmanoftheSupervisoryComiteshalconveneandpresideoverametingofthe

SupervisoryComite;IfthechairmanoftheSupervisoryComiteisunableorfailsto

performhis/herduties,aSupervisorselectedbymorethanonehalfofalSupervisorshal

conveneandpresideoverthemetingoftheSupervisoryComite.

TheSupervisoryComiteshalconsistofshareholderepresentativesandanapropriate

proportionoftheCompany’semployerepresentativesandthepercentageofemploye

representativeshalnotbelesthanone-third.ThemployerepresentativesoftheSupervisory

ComiteshalbelectedbyemployesoftheCompanyathemployerepresentatives’

meting,employemetingorotherwisedemocraticaly.

TheSupervisoryComiteshalexercisethefolowingfunctionsandpowers:

(i)toreviewtheperiodicreportsoftheCompanypreparedbytheBoardandpropose

writenexaminationsugestions;

(i)toreviewtheCompany’sfinancialposition;

(i)tosupervisetheconductsoftheDirectorsandseniormanagementmembersindischarge

oftheirdutiesandtoadviseonthedismisalofanyDirectororseniormanagement

memberwhoisinbreachoflaws,administrativeregulations,securitiesregulatoryrules

oftheplacewheretheCompany’sharesarelisted,theArticlesofAsociationor

resolutionsofthegeneralmetings;

(iv)todemandanyDirectororseniormanagementmemberwhoactsinamanerwhichis

harmfultotheCompany’sinterestorectifysuchbehavior;

(v)toproposetoconveneanextraordinarygeneralmeting,andtoconveneandpreside

overthegeneralmetingswheretheBoardfailstoperformitsdutytodosoasrequired

bytheCompanyLaw;

(vi)tosubmitproposalstothegeneralmetings;

APENDIXVISUMARYOFTHEARTICLESOFASOCIATION

–VI-37–

---

(vi)toinitiatelegalprocedingsagainstanyDirectororseniormanagementmember

acordingtoArticle189oftheCompanyLaw;

(vi)toinvestigateintounusualoperationoftheCompanyandifnecesary,toengagean

acountingfirm,alawfirmorotherprofesionalinstitutionstoasistinitsworkathe

expensesoftheCompany;

(ix)otherfunctionsandpowersprovidedbylaws,regulations,securitiesregulatoryrulesof

theplacewheretheCompany’sharesarelistedandtheArticlesofAsociation.

TheSupervisoryComitemayrequireDirectorsandseniormanagementmembersto

submitreportsontheperformanceoftheirduties.TheDirectorsandseniormanagementmembers

shalprovidetrueinformationandatatotheSupervisoryComiteandnotinterferewiththe

SupervisoryComiteorSupervisorsinthexerciseoftheirfunctionsandpowers.

ThemetingoftheSupervisoryComiteshalbeheldatleastonceverysixmonths.A

SupervisormayproposetoconveneanextraordinarymetingoftheSupervisoryComite.A

noticeoftheregularmetingoftheSupervisoryComiteshalbegivenintendayspriortothe

conveningofsuchmeting,andnoticeofthextraordinarymetingoftheSupervisoryComite

shalbegiveninfivedayspriortotheconveningofsuchmeting.

ResolutionsmadebytheSupervisoryComiteshalbeaprovedbymorethanhalfofthe

membersoftheSupervisoryComite.

FINANCIALANDACOUNTINGSYSTEMS,PROFITDISTRIBUTIONANDAUDITING

FinancialandAcountingSystems

TheCompanyshalestablishfinancialandacountingsystemsacordingtolaws,

administrativeregulations,theregulationstipulatedbytherelevantauthoritiesandsecurities

regulatoryrulesoftheplacewheretheCompany’sharesarelisted.TheCompanyshaladopthe

Gregoriancalendaryearforitsfiscalyear,i.e.thefiscalyearshalbefromJanuary1toDecember

31everyear.

TheCompanyshalsubmitandiscloseitsanualreportstotheCSRCandthestock

exchangeintheplacewheretheCompany’sharesarelistedwithinfourmonthsfromthendof

eachfiscalyear,anditsinterimreportstotherelevantbranchoficeoftheCSRCandthestock

exchangeintheplacewheretheCompany’sharesarelistedwithintwomonthsfromthendof

thefirsthalfofeachfiscalyear.Ifthesecuritiesregulatoryauthoritiesoftheplacewherethe

Company’sharesarelistedprovideotherwise,suchprovisionshalprevail.

APENDIXVISUMARYOFTHEARTICLESOFASOCIATION

–VI-38–

---

Theabove-mentionedanualandinterimreportshalbepreparedinacordancewith

relevantlaws,administrativeregulationsandtheprovisionsofsecuritiesregulatoryauthoritiesand

thestockexchangeintheplacewheretheCompany’sharesarelisted.

TheCompanywilnotestablishacountboksotherthanthestatutoryacountboks.The

asetsoftheCompanyshalnotbedepositedinanypersonalacount.

ProfitDistribution

TheCompanyisrequiredtowithdraw10%ofitsprofitsintoitstatutoryreservefundwhen

distributingeachyear’safter-taxprofits.Whenthecumulatedamountofthestatutoryreservefund

oftheCompanyhasreached50%ormoreofitsregisteredcapital,nofurtherwithdrawalis

required.WherethestatutoryreservefundoftheCompanyisinsuficientomakeupthelosesof

theCompanyfortheprecedingyear,profitsofthecurentyearshalbeapliedtomakeupthe

losesbeforeanyalocationtothestatutoryreservefundinacordancewiththeprovisionsinthe

precedingparagraph.

Subjectoaresolutionofthegeneralmeting,afterwithdrawalhasbenmadetothe

Company’statutoryreservefundfromitsafter-taxprofits,theCompanymaysetasidefundsfor

thediscretionaryreservefund.Aftermakingupoflosesandapropriationtoreservefunds,

balanceoftheprofitaftertaxshalbedistributedtoshareholdersinproportiontotheir

shareholdings,unlesotherwisestipulatedintheArticlesofAsociation.Ifthegeneralmeting

violatestheaboveprovisionsandprofitsaredistributedtotheshareholdersbeforetheCompany

makesupforlosesormakesalocationstothestatutoryreservefund,theprofitsdistributedin

violationoftheprovisionsmustbereturnedbysuchshareholderstotheCompany.Noprofitshal

bedistributedinrespectofthesharesoftheCompanywhichareheldbytheCompany.The

CompanyshalapointoneormorecolectionagentsforHshareholdersinHongKong.The

colectionagentshalcolectonbehalfoftherelevantHshareholdersthedividendsdistributed

andotherfundspayablebytheCompanyinrespectoftheHshares,andholdsuchmoniesintheir

custodypendingpaymentotheHshareholdersconcerned.Thecolectionagentsapointedbythe

Companyshalmetherequirementsofthelaws,regulationsandthesecuritiesregulatoryrulesof

theplacewheretheCompany’sharesarelisted.

ReservefundsoftheCompanyareusedforecoveringlosesoftheCompanyandexpanding

scaleofoperationoftheCompanyorconversionintoitscapital,butcapitalreservefundshalnot

beusedformakinguptheCompany’sloses.Whenthestatutoryreservefundsareconvertedinto

capital,theremainingbalanceofsuchreservefundmustnotbelesthan25%ofitsregistered

capitalbeforesuchconversion.

APENDIXVISUMARYOFTHEARTICLESOFASOCIATION

–VI-39–

---

Aftertheprofitdistributionplanhasbenresolvedathegeneralmeting,oraspecificplan

hasbenformulatedbytheBoardbasedontheconditionsandcapsoftheinterimdividendsfor

thenextyearwhichavebenconsideredandaprovedbytheanualgeneralmeting,theBoard

shalcompletedividend(orshare)distributionswithintwomonths.Ifitisnotposibleto

implementhespecificprofitdistributionplanwithintwomonthsduetotheprovisionsoflaws,

regulations,andthesecuritiesregulatoryrulesoftheplacewheretheCompany’sharesarelisted,

theimplementationdateofthespecificplanmaybeadjustedinacordancewithsuchprovisions

andtheactualsituation.

TheCompanyshalimplementacontinuousandstableprofitdistributionpolicy.Theprofit

distributionoftheCompanyatachesimportancetoprovidinginvestorswithreasonableandstable

investmentreturnswhilealsotakingintoacountheCompany’slong-termandsustainable

development.

TheCompanymaydistributedividendsincash,stocks,acombinationofcashandstocks,or

anyothermanerpermitedbylawsandregulations.Thecashdividendshaltakeprecedence

overthesharedividends.Wheretheconditionsofcashdividendsaremet,profitdistributionshal

becariedoutinformofcashdividends.

InternalAudit

TheCompanyshalimplementaninternalauditsystemandhaveprofesionalauditstaf,for

thecaryingoutofinternalauditandsupervisiononthefinancialrevenuesandexpendituresand

economicactivitiesoftheCompany.

TheinternalauditsystemoftheCompanyandthedutiesoftheauditingstafshalbesubject

totheaprovaloftheBoard.TheoficerinchargeofauditshalbeacountabletotheBoardand

reporthisworktothesame.

ApointmentofanAcountingFirm

TheCompanyshalengageanacountingfirmthatcomplieswiththelaws,regulations,and

securitiesregulatoryrulesoftheplacewheretheCompany’sharesarelistedtoaudithefinancial

statementsoftheCompany,verifythenetasetsandoferotherelevantconsultingservices.The

termofserviceshalbeoneyear,whichisrenewableuponexpiryoftheterm.

Theapointment,removal,ornon-renewalofanacountingfirmbytheCompanymustbe

pasedbythegeneralmetingbywayofanordinaryresolution,andtheBoardshalnotapoint

anacountingfirmbeforethedecisionismadebythegeneralmeting.

APENDIXVISUMARYOFTHEARTICLESOFASOCIATION

–VI-40–

---

TheCompanyguarantesthatitwilprovidetheacountingfirmwithtrueandcomplete

acountingvouchers,acountingboks,financialacountingreportsandotheracounting

informationwithoutanyrejection,concealmentorfalsehod.

Theremunerationormethodofdeterminingremunerationofanacountingfirmshalbe

decidedbythegeneralmeting.

Intheventofremovalornon-renewalofapointmentofanacountingfirm,theCompany

shalnotifytheacountingfirm30daysinadvance.Theacountingfirmshalbentitledtomake

representationswhentheresolutionregardingtheremovaloftheacountingfirmisconsideredat

thegeneralmetingoftheCompany.Wheretheacountingfirmresigns,itshalmakecleartothe

generalmetingwhetherthereisanyimproprietyonthepartoftheCompany.

Merger,Division,CapitalIncreaseandReduction,DisolutionandLiquidation

Merger,Division,CapitalIncreaseandReduction

Themergerofthecompanymaytaketheformofeithermergerbyabsorptionormergerby

newestablishment.Incaseofmergerbyabsorption,acompanyabsorbsanyothercompanyand

theabsorbedcompanyisdisolved.Incaseofmergerbynewestablishment,twormore

companiesmergeintoanewoneandthepartiestothemergeraredisolved.

Ifthecompanyisinvolvedinamerger,thepartiestothemergershalenterintoamerger

agrementandprepareabalanceshetandapropertylist.Within10daysfromthedateof

adoptionofthemergeresolution,thecompanyshalnotifyitscreditorsandwithin30daysitshal

makeananouncementonmediaplatformsthatmethecriteriasetbytheCSRC,theNational

EnterpriseCreditInformationPublicitySystem,thewebsiteoftheShanghaiStockExchange

(htp:/w.se.com.cn),andtheHKEXnewswebsiteoftheHongKongStockExchange

(htps:/w.hkexnews.hk).Wherethereareotherequirementsimposedbythesecurities

regulatoryrulesoftheplacewherethecompany’sharesarelisted,suchrequirementshal

prevail.Acreditormay,within30daysfromthedateofreceiptofthewritenoticeor,ifhe/she

didnotreceiveawritenotice,within45daysfromthedateoftheanouncement,requirethe

companytopayitsdebtinfulortoprovidecomensuratesecurity.Wherethereareother

requirementsimposedbythesecuritiesregulatoryrulesoftheplacewherethecompany’shares

arelisted,suchrequirementshalprevail.

Whenthecompanyismerged,theclaimsandebtsofeachpartytothemergershalbe

sucededtobythecompanysurvivingthemergerorthenewcompanyestablishedsubsequento

themerger.

APENDIXVISUMARYOFTHEARTICLESOFASOCIATION

–VI-41–

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Ifthecompanyisdivided,itspropertyshalbedividedacordingly.Whenthecompanyis

divided,itshalprepareabalanceshetandapropertylist.Within10daysfromthedateof

adoptionoftheresolutiononthedivision,thecompanyshalnotifyitscreditorsandwithin30

daysitshalmakeananouncementonmediaplatformsthatmethecriteriasetbytheCSRC,the

NationalEnterpriseCreditInformationPublicitySystem,thewebsiteoftheShanghaiStock

Exchange(htp:/w.se.com.cn),andtheHKEXnewswebsiteoftheHongKongStock

Exchange(htps:/w.hkexnews.hk).Wherethereareotherequirementsimposedbythe

securitiesregulatoryrulesoftheplacewherethecompany’sharesarelisted,suchrequirements

shalprevail.Thesurvivingcompanieshalbejointlyliableforthepre-divisiondebtsofthe

company,unlesprovidedotherwiseinawritenagrementondebtrepaymentreachedbetwenthe

companyandacreditorpriortothedivision.

Ifthecompanynedstoreduceitsregisteredcapital,itmustprepareabalanceshetanda

listofitsproperty.Thecompanyshalnotifyitscreditorswithin10daysfromthedateofadoption

oftheresolutiontoreduceitsregisteredcapitalandshalpublishapublicanouncementonmedia

platformsthatmethecriteriasetbytheCSRC,theNationalEnterpriseCreditInformation

PublicitySystem,thewebsiteoftheShanghaiStockExchange(htp:/w.se.com.cn),andthe

HKEXnewswebsiteoftheHongKongStockExchange(htps:/w.hkexnews.hk)within30

daysfromthedateofsuchresolution.Creditorshal,within30daysofreceivingwritenotice,

orwithin45daysofthedateofthepublicanouncementforthosewhohavenotreceivedwriten

notice,bentitledtorequirethecompanytopayitsdebtsinfulortoprovideacoresponding

security.Wherethereareotherequirementsimposedbythesecuritiesregulatoryrulesoftheplace

wherethecompany’sharesarelisted,suchrequirementshalprevail.

Theregisteredcapitalofthecompanyafterthereductionshalnotbelesthanthestatutory

minimumamount.

Ifachangeocursinthecompany’sregisteredparticularsduetoitsmergerordivision,the

changeshalberegisteredwiththecompany’sregistrarinacordancewiththelaws.Ifthe

companyisdisolved,de-registrationofthecompanyshalbecariedoutinacordancewiththe

laws.Ifanewcompanyisestablished,registrationofthestablishmentofsuchcompanyshalbe

cariedoutinacordancewiththelaws.Theincreaseoreductionofregisteredcapitalofthe

companyshalberegisteredwiththecompanyregistrarinacordancewiththelaws.

DisolutionandLiquidation

Thecompanyshalbedisolvedforthefolowingreasons:

(i)thetermofbusinespecifiedintheArticlesofAsociationhasexpiredoranyother

causefordisolutionspecifiedintheArticlesofAsociationhasocured;

APENDIXVISUMARYOFTHEARTICLESOFASOCIATION

–VI-42–

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(i)thegeneralmetingresolvestodisolvethecompany;

(i)disolutionisnecesaryasaresultofthemergerordivisionofthecompany;

(iv)thecompanyhasitsbusineslicenserevoked,isorderedtoclosedownorevokedin

acordancewiththelaws;

(v)seriousdificultiesariseintheoperationandmanagementofthecompanyandits

continuedexistencewouldcausematerialostotheinterestsoftheshareholdersand

suchdificultiescanotberesolvedthroughothermeans,inwhichcaseshareholders

holdingatleast10percentofalshareholders’votingrightsmaypetitionthepeople’s

courtodisolvethecompany.

Incaseofcircumstancesdescribedinitem(i)above,thecompanymaycontinuetoexistby

amendingtheArticlesofAsociation.AmendmentstotheArticlesofAsociationpursuantothe

precedingparagraphshalbesubjectotheaprovalofshareholdersrepresentingtwo-thirdsor

aboveofthevotingrightspresentathegeneralmeting.Ifthecompanyisdisolvedpursuanto

items(i),(i),(iv)or(v)above,itshalestablishaliquidationcomiteandliquidationshal

comencewithin15daysfromthedateonwhichthecausefordisolutionarises.Theliquidation

comiteshalbecomposedofpersonsdeterminedbythedirectorsorthegeneralmeting.Ifthe

companyfailstoestablishtheliquidationcomiteandcaryoutheliquidationwithinthetime

limit,itscreditorsmaypetitionthepeople’scourtodesignaterelevantpersonstoforma

liquidationcomiteandcaryoutheliquidation.

Theliquidationcomiteshalnotifycreditorswithinaperiodof10daysfromthedateof

itsestablishmentandmakeanouncementsonmediaplatformsthatmethecriteriasetbythe

CSRC,theNationalEnterpriseCreditInformationPublicitySystem,thewebsiteoftheShanghai

StockExchange(htp:/w.se.com.cn),andtheHKEXnewswebsiteoftheHongKongStock

Exchange(htps:/w.hkexnews.hk)within60days.Creditorshaldeclaretheirclaimstothe

liquidationcomitewithin30daysfromthedateofreceiptofthenoticeor,iftheydidnot

receiveanotice,within45daysfromthedateoftheanouncement.Wherethereareother

requirementsimposedbythesecuritiesregulatoryrulesoftheplacewherethecompany’shares

arelisted,suchrequirementshalprevail.

Whendeclaringtheirclaims,creditorshalexplaintheparticularsrelevantotheirclaims

andsubmitsuportingdocumentation.Theliquidationcomiteshalregistertheclaims.

Duringtheclaimdeclarationperiod,theliquidationcomiteshalnotpayanydebtsto

creditors.

APENDIXVISUMARYOFTHEARTICLESOFASOCIATION

–VI-43–

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Aftertheliquidationcomitehasliquidatedthecompany’spropertyandpreparedabalance

shetandpropertylist,itshalformulatealiquidationplanandsubmitsuchplantothegeneral

metingorthepeople’scourtforconfirmation.Thecompany’spropertyremainingafterpayment

oftheliquidationexpenses,thewages,socialinsurancepremiumsandstatutorycompensationof

themployes,thetaxesowedandalthecompany’sdebtshalbedistributedbythecompanyto

theshareholdersinproportiontothesharestheyhold.

Duringliquidation,thecompanyshalcontinuetoexistbutmaynotengageinanybusines

activitiesunrelatedtotheliquidation.Thecompany’spropertywilnotbedistributedtothe

shareholdersuntilrepaymentofitsdebtsinacordancewiththeprecedingparagraph.

Iftheliquidationcomite,havingliquidatedthecompany’spropertyandprepareda

balanceshetandpropertylist,discoversthathecompany’spropertyisinsuficientopayits

debtsinful,itshalaplytothepeople’scourtforadeclarationofbankruptcyinacordancewith

thelaws.Afterthepeople’scourthasruledtodeclarethecompanybankrupt,theliquidation

comiteshalturnovertheliquidationmaterstothepeople’scourt.

Folowingcompletionoftheliquidationofthecompany,theliquidationcomiteshal

preparealiquidationreport,submithesametothegeneralmetingorthepeople’scourtfor

confirmation,submithesametothecompanyregistrar,aplyforcancelationofthecompany’s

registrationandpubliclyanouncethecompany’stermination.

Wherethecompanyisdeclaredbankruptcyinacordancewiththelaws,itshalimplement

bankruptcyliquidationinacordancewiththerelevantlawsrelatingtobankruptcyofenterprise.

AmendmentotheCompany’sArticlesofAsociation

ThecompanyshalamendtheArticlesofAsociationif:

(i)provisionsoftheArticlesconflictwiththeCompanyLaworelatedlaws,administrative

regulationsandthesecuritiesregulatoryrulesoftheplacewherethecompany’shares

arelistedaftersuchlawsareamended;

(i)achangeocursinthecompany’situationandsuchchangeisinconsistentwiththe

materstatedherein;

(i)thegeneralmetingdecidestoamendtheArticles.

APENDIXVISUMARYOFTHEARTICLESOFASOCIATION

–VI-44–

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AmendmentstotheArticlesadoptedbyresolutionofthegeneralmetingthataresubjecto

aprovalbythecompetentauthoritieshalbesubmitedtothecompetentauthoritiesforaproval.

IfanamendmentotheArticlesinvolvesaregisteredparticularofthecompany,registrationofthe

changeshalbecariedoutinacordancewiththelaws.

TheBoardshalamendtheArticlesofAsociationinacordancewiththeresolutionofthe

generalmetingontheamendmentotheArticlesandtheaprovingopinionofrelevantcompetent

authorities.

AmendmentstotheArticlesthatarerequiredtobedisclosedunderthelaws,regulationsand

thesecuritiesregulatoryrulesoftheplacewherethecompany’sharesarelistedshalbe

anouncedinacordancewithrelevantrequirements.

APENDIXVISUMARYOFTHEARTICLESOFASOCIATION

–VI-45–

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A.FURTHERINFORMATIONABOUTOURGROUP

1.Incorporation

InNovember2010,ourpredecesorwasestablishedunderthenameofSICMaterialsCo.,

Ltd.(山东天岳先进材料科技有限公司)asalimitedliabilitycompanyunderthelawsofthePRC.

OnNovember17,2020,ourpredecesorwasconvertedfromalimitedliabilitycompanytoajoint

stocklimitedcompanyandwasrenamedasSICo.,Ltd.(山东天岳先进科技股份有限公司).

OurCompanycompletedthelistingofourASharesontheSTARMarket(stockcode:688234)on

January12,2022.AsoftheLatestPracticableDate,theregisteredcapitaloftheCompanywas

RMB429,711,044.

OuregisteredoficeislocatedatNo.99,SouthTianyueRoad,HuaiyinDistrict,JinanCity,

ShandongProvince,PRC,andourprincipalplaceofbusinesinHongKongisatRom503,5th

Flor,TungWaiComercialBuilding,109−111GloucesterRoad,Wanchai,HongKong.Our

Companyhasbenregisteredasanon-HongKongcompanyinHongKongunderPart16ofthe

CompaniesOrdinanceonMarch11,2025withtheRegistrarofCompaniesinHongKong.Ms.

LeungSauFong(梁秀芳)hasbenapointedasouragentfortheaceptanceofserviceofproces

inHongKongwhosecorespondenceadresisUnit1301,13/F.,WingTuckComercialCentre,

177−183WingLokStret,SheungWan,HongKong.

AswearestablishedinthePRC,ourcorporatestructureandArticlesofAsociationare

subjectotherelevantlawsandregulationsofthePRC.Asumaryoftherelevantprovisionsof

ourArticlesofAsociationisetoutin“ApendixVI—SumaryoftheArticlesofAsociation”.

AsumaryofcertainrelevantaspectsofthelawsandregulationsofthePRCisetoutin

“ApendixV—SumaryofPrincipalLegalandRegulatoryProvisions.”

2.ChangesinShareCapitalofOurCompany

Saveasdisclosedbelow,therehasbenoalterationinthesharecapitaloftheCompany

withintwoyearsimediatelyprecedingthedateofthisprospectus.

ArepurchasemandatefortherepurchaseofASharesforthepurposeofourCompany’s

employestockownershiplansorequityincentiveswasaprovedbythe21stmetingofthefirst

sesionoftheBoardconvenedonNovember27,2023(“RepurchaseMandate”).TheRepurchase

Mandatewasvalidfor6monthsfromthedateofaprovaloftherepurchasemandatebytheBoard

andhasexpiredonMay26,2024.Atotalof2,005,884AShareswererepurchasedunderthe

RepurchaseMandate,whichareheldunderourCompany’stockrepurchaseacountandonot

caryanyshareholders’rights,includingbutnotlimitedtovotingrightsatheShareholders’

metingandividendrights.AnyofsuchrepurchasedASharesnotusedforpurposeofour

APENDIXVISTATUTORYANDGENERALINFORMATION

–VI-1–

---

Company’semployestockownershiplansorequityincentiveswithin36monthsafterthe

completionoftherepurchaseshalbecanceled.AsoftheLatestPracticableDate,theCompany

hasnotcanceledanyofsuchrepurchasedAShares.

3.ChangesinShareCapitalofOurSubsidiaries

Asumaryofthecorporateinformationandtheparticularsofoursubsidiariesaresetoutin

ApendixItothisprospectus.

Thefolowingsetsouthechangesinthesharecapitalofoursubsidiariesduringthetwo

yearsimediatelyprecedingthedateofthisprospectus:

SICEuropeGmbH

OnOctober4,2023,SICEuropeGmbHwasincorporatedasalimitedliabilitycompanyin

GermanywitharegisteredcapitalofEUR25,000.

BeijingTianyue

OnJanuary5,2024,BeijingTianyuewasincorporatedasalimitedliabilitycompanyinthe

PRCwitharegisteredcapitalofRMB20milion.

OnJune23,2025,BeijingTianyuesubmitedsimplifiederegistrationaplicationtothe

AdministrationforMarketRegulationofBeijingHaidianDistrict.

VHInvestmentInc.

OnApril15,2024,VHInvestmentInc.wasincorporatedasalimitedliabilitycompanyinthe

BVIwitharegisteredcapitalofwithanauthorizedsharecapitalof50,000shareswithUSD1.00

eachandanisuedsharecapitalof850shareswithUSD1.00each.

SICMalaysiaHoldingsInc.

OnApril17,2024,SICMalaysiaHoldingsInc.wasincorporatedasalimitedliability

companyinMalaysiawitharegisteredcapitalofwithanauthorizedsharecapitalof50,000shares

withUSD1.00eachandanisuedsharecapitalof1,700shareswithUSD1.00each.

APENDIXVISTATUTORYANDGENERALINFORMATION

–VI-2–

---

ShanghaiTianyue

OnApril15,2025,theregisteredcapitalofShanghaiTianyuewasincreasedfromRMB400

miliontoRMB900milion.

ShenzhenTianyue

OnJune9,2025,ShenzhenTianyuecompletedthevoluntaryderegistrationprocesat

ShenzhenMunicipalAdministrationforMarketRegulation.

ShanghaiZhuhuan

OnJune16,2025,ShanghaiZhuhuanwasincorporatedasalimitedliabilitycompanyinthe

PRCwitharegisteredcapitalofRMB1milion.

Savedasdisclosedabove,therehasbenoalterationinthesharecapitalofoursubsidiaries

duringthetwoyearsimediatelyprecedingthedateofthisprospectus.

4.ResolutionsPasedbyOurShareholders’GeneralMetinginRelationtotheGlobal

Ofering

AthegeneralmetingoftheShareholdersheldonFebruary19,2025,ourShareholders

resolvedtoaprove,amongotherthings,thefolowingresolutions:

(a)theisuancebyourCompanyofHShareswithanominalvalueofRMB1.0eachand

suchHSharesbelistedontheStockExchange;

(b)thenumberofHSharestobeisuedbeforethexerciseoftheOver-alotmentOption

shalnotbemorethan15%ofthetotalisuedsharecapitalofourCompanyasenlarged

bytheGlobalOfering,andgrantingtheUnderwriterstheOver-alotmentOptionofno

morethan15%ofthenumberofHSharesisuedpursuantotheGlobalOfering;

(c)authorizationoftheBoardanditsauthorizedpersontohandlerelevantmatersrelating

to,amongotherthings,theGlobalOfering,theisueandlistingoftheHShares;and

(d)subjectothecompletionoftheGlobalOfering,theconditionaladoptionoftheArticles

ofAsociation,whichshalbecomefectiveontheListingDateandtheauthorization

oftheBoardtoamendtheArticlesofAsociationinacordancewithrelevantlawsand

regulationsandupontherequestfromtheStockExchangeandrelevantPRCregulatory

authorities.

APENDIXVISTATUTORYANDGENERALINFORMATION

–VI-3–

---

B.FURTHERINFORMATIONABOUTOURBUSINES

1.SumaryofMaterialContracts

Wehaventeredintothefolowingcontracts(notbeingcontractsenteredintointheordinary

courseofbusines)withinthetwoyearsimediatelyprecedingthedateofthisprospectusthatare

ormaybematerialtourbusines:

(a)acornerstoneinvestmentagrementdatedAugust6,2025enteredintoamongour

Company,GuonengEnvironmentalProtectionInvestmentGroupCo.,Limited(国能环保

投资集团有限公司),ChinaInternationalCapitalCorporationHongKongSecurities

Limited,CITICSecurities(HongKong)Limited,CLSALimitedandHaitong

InternationalSecuritiesCompanyLimited,withrespectoasubscriptionofHSharesat

theOferPriceintheagregateamountoftheHongKongdolarequivalentof

US$50,000,000;

(b)acornerstoneinvestmentagrementdatedAugust7,2025enteredintoamongour

Company,MiraeAsetSecurities(HK)Limited,ChinaInternationalCapitalCorporation

HongKongSecuritiesLimited,CITICSecurities(HongKong)Limited,CLSALimited,

HaitongInternationalSecuritiesCompanyLimitedandBOCIAsiaLimited,withrespect

toasubscriptionofHSharesatheOferPriceintheagregateamountoftheHong

KongdolarequivalentofUS$15,000,000;

(c)acornerstoneinvestmentagrementdatedAugust7,2025enteredintoamongour

Company,SDGAsetManagement(HK)Limited,ChinaInternationalCapital

CorporationHongKongSecuritiesLimited,CITICSecurities(HongKong)Limitedand

CLSALimited,withrespectoasubscriptionofHSharesatheOferPriceinthe

agregateamountofHKD100,000,000;

(d)acornerstoneinvestmentagrementdatedAugust7,2025enteredintoamongour

Company,H&TInteligentControlInternationalCo.,Limited(和而泰智能控制国际有

限公司),ChinaInternationalCapitalCorporationHongKongSecuritiesLimited,CITIC

Securities(HongKong)Limited,CLSALimitedandHaitongInternationalSecurities

CompanyLimited,withrespectoasubscriptionofHSharesatheOferPriceinthe

agregateamountofHKD80,000,000;

APENDIXVISTATUTORYANDGENERALINFORMATION

–VI-4–

---

(e)acornerstoneinvestmentagrementdatedAugust7,2025enteredintoamongour

Company,Mr.LanKun(兰坤),ChinaInternationalCapitalCorporationHongKong

SecuritiesLimited,CITICSecurities(HongKong)LimitedandCLSALimited,with

respectoasubscriptionofHSharesatheOferPriceintheagregateamountof

HKD50,000,000;and

(f)theHongKongUnderwritingAgrement.

2.IntelectualPropertyRights

(a)Trademarks

AsatheLatestPracticableDate,wehadregisteredthefolowingtrademarkswhichwe

considertobeormaybematerialtourbusines:

No.Trademark

Placeof

registrationRegisteredOwnerClas

Registration

number

Registration

dateExpirydate

1.PRCourCompany9634442082024.03.072034.03.06

2.PRCourCompany40634450942022.12.072032.12.06

3.PRCourCompany3659087062023.11.072033.11.06

4.PRCourCompany3634333802023.06.212033.06.20

5.PRCourCompany9105355522023.04.212033.04.20

6.PRCourCompany9102039202023.01.282033.01.27

7.PRCourCompany1634430692022.12.212032.12.20

8.PRCourCompany1356576652020.03.142030.03.13

9.PRCourCompany11356515392019.12.142029.12.13

10.PRCourCompany40356466622019.11.282029.11.27

11.PRCourCompany42356515662019.11.282029.11.27

12.PRCourCompany1356731042019.10.072029.10.06

13.PRCourCompany38356709702019.10.072029.10.06

APENDIXVISTATUTORYANDGENERALINFORMATION

–VI-5–

---

No.Trademark

Placeof

registrationRegisteredOwnerClas

Registration

number

Registration

dateExpirydate

14.PRCourCompany14356566072019.09.072029.09.06

15.PRCourCompany3356565832019.09.072029.09.06

16.PRCourCompany9327947412019.06.142029.06.13

17.HongKongourCompany93020932382011.11.222031.11.21

(b)Copyrights

AsoftheLatestPracticableDate,ourGrouphadregisteredthefolowingsoftwarecopyrights

whichweconsidertobematerialtourbusines:

No.Softwarename

Placeof

registrationRegisteredowner

1.IndustrialInternetSiCRawMaterialQuality

InspectionSystemV1.0(工业互联网碳化硅制备原

料质量检测系统V1.0)

PRCourCompany

2.Internet-basedAutomaticInspectionandControl

SystemforIndustrialProductsV1.0(基于互联网

的工业产品自动检测控制系统V1.0)

PRCourCompany

3.IndustrialInternetSiCManufacturingProces

IntegrationManagementSystemV1.0

(工业互联网碳化硅制备工艺综合管理系统V1.0)

PRCourCompany

4.IndustrialPowderAutomaticRatioCalculatorV1.0

(工业粉料全自动主料配比计算软件V1.0)

PRCourCompany

5.IndustrialEquipmentAutomaticVoltageControl

SoftwareV1.0(工业设备自动调压控制软件V1.0)

PRCourCompany

6.InteligentManufacturingProcesControlSystem

forSiCEquipmentV1.0(碳化硅制备智能制造生

产工序控制系统V1.0)

PRCourCompany

APENDIXVISTATUTORYANDGENERALINFORMATION

–VI-6–

---

No.Softwarename

Placeof

registrationRegisteredowner

7.Inteligentcontrolsystemforautomatictemperature

regulationofindustrialfacilitiesV1.0(工业设施自

动调温的智能控制系统V1.0)

PRCourCompany

8.IndustrialInternetSiCPreparationTemperature

ControlSystemV1.0(工业互联网碳化硅制备温度

实时调控系统V1.0)

PRCourCompany

9.IndustrialPowderFormulationMeasuringand

ProportioningSoftwareV1.0(工业粉料配方计量

配比软件V1.0)

PRCourCompany

10.IndustrialPowderFormulationR&DProportioning

DataAnalysisSystemV1.0(工业粉料配方研发配

比数据分析系统V1.0)

PRCourCompany

11.Real-timemonitoringsoftwareforindustrial

environmentautomatedcleaningdevicesV1.0

(工业环境自动清洁装置实时监管软件V1.0)

PRCourCompany

12.InteligentManufacturingSiCEquipmentAutomatic

VoltageRegulationControlSystemV1.0(智能制

造碳化硅制备自动化调压控制系统V1.0)

PRCourCompany

13.InteligentManufacturingSiCEquipmentAutomated

CleaningSoftwareV1.0(智能制造碳化硅制备设

备自动化清洁软件V1.0)

PRCourCompany

14.IndustrialInternetAutomaticTemperatureControl

SystemforSiCEquipmentV1.0(工业互联网碳化

硅制备自动调温控制系统V1.0)

PRCourCompany

15.IndustrialInternetDesignShowromEquipment

DesignSystemV1.0(工业互联网设计展厅设备设

计系统V1.0)

PRCourCompany

16.IndustrialInternetInteligentMonitoringData

ServicePlatformV1.0(工业互联网智能监测数据

服务平台V1.0)

PRCourCompany

APENDIXVISTATUTORYANDGENERALINFORMATION

–VI-7–

---

No.Softwarename

Placeof

registrationRegisteredowner

17.IndustrialInternetPowerProductionDataReal-time

MonitoringSoftwareV1.0(工业互联网电力生产

数据实时监控软件V1.0)

PRCourCompany

18.Internet-basedInteligentFaultRepairSystemfor

IndustrialEquipmentV1.0(基于互联网的工业设

备智能化故障检修系统V1.0)

PRCourCompany

19.Internet-basedIndustrialEquipmentTemperature

DetectionandControlPlatformV1.0(基于互联网

的工业设备温度自动检测调控平台V1.0)

PRCourCompany

20.Internet-basedindustrialequipmentruning

environmentinteligentemperaturecontrol

softwareV1.0(基于互联网的工业设备运行环境智

能调温控制软件V1.0)

PRCourCompany

21.IndustrialEquipmentRobotAutomaticCleaning

ControlSystemV1.0(工业设备机器人自动清洁控

制系统V1.0)

PRCourCompany

22.RemoteQualityMonitoringandControlPlatformfor

IndustrialInternetProductsV1.0(工业互联网产品

远程质量监测控制平台V1.0)

PRCourCompany

23.Internet-basedIndustrialAutomationInspectionData

AnalysisandControlSoftwareV1.0(基于互联网

的工业自动化检测数据分析控制软件V1.0)

PRCourCompany

24.Industrialequipmentoperationprocesautomatic

inspectionmanagementsystemV1.0(工业设备运

行流程自动检测管理系统V1.0)

PRCourCompany

25.Internet-basedAutomaticSignalDetectionand

ReceptionSystemforIndustrialEquipmentV1.0

(基于互联网的工业设备信号自动检测接收系统

V1.0)

PRCourCompany

APENDIXVISTATUTORYANDGENERALINFORMATION

–VI-8–

---

No.Softwarename

Placeof

registrationRegisteredowner

26.IndustrialInternetSiCEquipmentProduction

ProcesManagementSystemV1.0

(工业互联网碳化硅制备生产工艺管理系统V1.0)

PRCourCompany

27.IndustrialInternetSiCProductionIntegrated

AplicationSoftwareV1.0(工业互联网碳化硅制

备生产综合应用软件V1.0)

PRCourCompany

28.IndustrialEquipmentTemperatureControlAutomatic

ComisioningManagementSystemV1.0(工业设

备温度控制全自动调试管理系统V1.0)

PRCourCompany

29.InteligentManufacturingEquipmentOperation

SafetyReal-timeMonitoringSystemV1.0(智能制

造设备运行安全实时监管系统V1.0)

PRCourCompany

30.IndustrialRegulatorInteligentIntegratedControl

ManagementSystemV1.0(工业调压阀智能一体化

控制管理系统V1.0)

PRCourCompany

31.Internet-basedTemperatureMonitoringand

AutomaticControlSystemforIndustrial

EquipmentV1.0(基于互联网的工业设备温度监测

自动调控系统V1.0)

PRCourCompany

32.IndustrialInternetFaultDetectionandAnalysis

SystemV1.0(工业互联网故障自动检测分析系统

V1.0)

PRCourCompany

33.IndustrialEquipmentInteligentVoltageRegulator

ManagementSystemV1.0(工业设备智能稳压调压

管理系统V1.0)

PRCourCompany

34.InteligentManufacturingInstalationAutomation

ComisioningManagementSystemV1.0(智能制

造装置安装自动化调试管理系统V1.0)

PRCourCompany

APENDIXVISTATUTORYANDGENERALINFORMATION

–VI-9–

---

No.Softwarename

Placeof

registrationRegisteredowner

35.InteligentManufacturingDeviceOperationSystem

V1.0(智能制造装置运行智能化控制操作系统

V1.0)

PRCourCompany

36.InteligentManufacturingSiCPreparationPowder

AutomaticProportioningSoftwareV1.0(智能制造

碳化硅制备粉料自动化配比软件V1.0)

PRCourCompany

37.IndustrialPowderProcesingDataProportioning

SimulationExperimentAnalysisSystemV1.0

(工业粉料加工数据配比模拟实验分析系统V1.0)

PRCourCompany

38.IndustrialEquipmentOperatingEnvironment

AutomaticPresureRegulationInspectionSystem

V1.0(工业设备运行环境自动调压检测系统V1.0)

PRCourCompany

39.Internet-basedIndustrialFacilitiesAutomation

InspectionandControlSystemV1.0(基于互联网

的工业设施自动化检测控制系统V1.0)

PRCourCompany

40.IndustrialPowderAutomaticRatioOptimization

EvaluationSystemV1.0(工业粉料全自动配比优

化评估系统V1.0)

PRCourCompany

41.FulyAutomaticVoltageRegulationandEnergy

SavingEvaluationSoftwareforIndustrial

EquipmentV1.0(工业设备全自动调压节能评估软

件V1.0)

PRCourCompany

42.IndustrialInternetSiCPreparationProces

AutomationControlSystemV1.0(工业互联网碳

化硅制备工艺自动控制系统V1.0)

PRCourCompany

43.Internet-basedIndustrialAutomaticBatching

InspectionandControlSystemV1.0(基于互联网

的工业自动配料检测控制系统V1.0)

PRCourCompany

44.IndustrialPowderProportioningSystemV1.0(工业

粉料配比精准配置系统V1.0)

PRCourCompany

APENDIXVISTATUTORYANDGENERALINFORMATION

–VI-10–

---

No.Softwarename

Placeof

registrationRegisteredowner

45.InteligentManufacturingSiCEquipmentDigital

ProcesingProductionSupervisionSystemV1.0

(智能制造碳化硅制备数字化加工生产监管系统

V1.0)

PRCourCompany

46.InteligentManufacturingAutomaticCleaningand

DustControlSystemV1.0(智能制造自动清洁防

尘管理系统V1.0)

PRCourCompany

47.InteligentManufacturingDeviceOperationFault

MaintenanceManagementSystemV1.0(智能制造

装置运行故障维护管理系统V1.0)

PRCourCompany

48.IndustrialAutomaticCleaningRemoteMonitoring

SystemV1.0(工业全自动清洁远程监测系统V1.0)

PRCourCompany

49.IndustrialInternet-basedMaterialAutomation

ProportioningSystemV1.0(基于工业互联网的物

料自动化配比系统V1.0)

PRCourCompany

50.InteligentManufacturingLineSafeOperation

AutomaticInspectionSystemV1.0(智能制造流水

线安全运行自动检测系统V1.0)

PRCourCompany

51.SafeandIntegratedStorageManagementSystemfor

SiCRawMaterialsV1.0(碳化硅制备原材料安全

综合存储管理系统V1.0)

PRCourCompany

52.InteligentManufacturingEquipmentAutomatic

VoltageRegulationControlSystemV1.0(智能制

造设备自动化调压控制系统V1.0)

PRCourCompany

53.SiCMaterialWearResistanceAutomaticInspection

SystemV1.0(碳化硅制备材料耐磨性自动检测系

统V1.0)

PRCourCompany

54.IndustrialInternetSiCPreparationAutomatic

BatchingControlSystemV1.0(工业互联网碳化硅

制备自动化配料控制系统V1.0)

PRCourCompany

APENDIXVISTATUTORYANDGENERALINFORMATION

–VI-11–

---

No.Softwarename

Placeof

registrationRegisteredowner

55.IndustrialInternetSiCEquipmentManufacturing

AutomationSystemV1.0(工业互联网碳化硅制备

制造自动操作系统V1.0)

PRCourCompany

56.InteligentManufacturingEquipmentMaintenance

andCleaningIntegratedManagementSystemV1.0

(智能制造设备养护清洁综合管理系统V1.0)

PRCourCompany

57.Internet-basedAutomaticProportioningManagement

SystemforIndustrialSiCEquipmentV1.0(基于互

联网的工业碳化硅制备自动配比管理系统V1.0)

PRCourCompany

58.InteligentManufacturingSiCEquipmentAutomatic

InspectionManagementSystemV1.0(智能制造碳

化硅制备自动化检测管理系统V1.0)

PRCourCompany

59.Internet-basedIndustrialEquipmentOperationand

ControlSystemV1.0(基于互联网的工业设备运行

控制系统V1.0)

PRCourCompany

60.InteligentManufacturingSiCPreparationPowder

AutomaticProportioningFormulaRecording

SoftwareV1.0(智能制造碳化硅制备粉料自动配比

配方记录软件V1.0)

PRCourCompany

61.SiCLongCrystalProjectInteligentManagement

SoftwareV1.0(碳化硅长晶工程智能管理软件

V1.0)

PRCourCompany

62.Real-timeautomatedanalysisandmonitoringsystem

fortheoperationprocesofmultiplelongcrystal

equipmentsV1.0(多台长晶设备运行过程的实时

自动化分析监控系统V1.0)

PRCourCompany

63.SiClongcrystalelectronicequipmentqualitytesting

andanalysisplatformV1.0(碳化硅长晶电子设备

质量检测分析平台V1.0)

PRCourCompany

APENDIXVISTATUTORYANDGENERALINFORMATION

–VI-12–

---

(c)Patents

AsoftheLatestPracticableDate,wehadregisteredtheownershipofand/orhadtherighto

usethefolowingpatentswhichweconsidertobeormaybematerialtourbusines:

No.PatentPatentownerPatentcategory

Placeof

registrationPatentnumber

1.Ahigh-qualitySiCsubstrateand

itspreparationmethodand

semiconductordevice(一种高

品质碳化硅衬底及其制备方法

和半导体器件)

ourCompanyInvention

patent

PRCZL202410586417.4

2.ASiCsubstratewithigh

uniformityanditspreparation

methodandsemiconductor

device(一种高均匀性的碳化硅

衬底及其制备方法和半导体器

件)

ourCompanyInvention

patent

PRCZL202410579039.7

3.ASiCstriperbasedonlaser

fracturinganditsprocesing

method(一种基于镭射致裂的

碳化硅剥离片及加工方法)

ourCompanyInvention

patent

PRCZL202211724333.X

4.ASiCsedcrystalandaSiC

singlecrystalwaferandsingle

crystalingotmadetherefrom

(一种碳化硅籽晶及由其制得的

碳化硅单晶片、单晶锭)

ourCompanyInvention

patent

PRCZL202210257397.7

5.AkindofSiCmonowafersand

sedcrystalswithuniform

crystalinequality(一种结晶品

质均匀的碳化硅单晶片及籽晶)

ourCompanyInvention

patent

PRCZL202210005971.X

6.AlowdislocationdensitySiC

substrateanditspreparation

method(一种低位错密度的碳

化硅衬底及其制备方法)

ourCompanyInvention

patent

PRCZL202110947945.4

APENDIXVISTATUTORYANDGENERALINFORMATION

–VI-13–

---

No.PatentPatentownerPatentcategory

Placeof

registrationPatentnumber

7.SiCcrystalswithanular

morphology,preparation

methodthereofandsubstrate

thereof(具有环形貌的碳化

硅晶体及其制备方法和制得的

衬底)

ourCompanyInvention

patent

PRCZL202110950669.7

8.AkindofSiCcrystalwithfew

smalcornergrainboundaries,

substrateanditspreparation

method(一种小角晶界少的碳

化硅晶体、衬底及其制备方法)

ourCompanyInvention

patent

PRCZL202110948698.X

9.Amethodforblockingthe

inwardslipofedge

dislocationsinSiCcrystalsand

theircrystals(一种阻挡碳化硅

晶体边缘位错向内滑移的方法

及其晶体)

ourCompanyInvention

patent

PRCZL202110947961.3

10.Amethodandcrystalfor

blockinginwardextensionof

smalcornergrainboundaries

athedgeofaSiCcrystal

(一种阻挡碳化硅晶体边缘小角

晶界向内延伸的方法及晶体)

ourCompanyInvention

patent

PRCZL202110948718.3

11.Atreatmentmethodandevice

forimprovingthequalityof

SiCbacking(一种提高碳化硅

衬底质量的处理方法及装置)

ourCompanyInvention

patent

PRCZL202110750303.5

12.ASiCsubstratewithighsurface

cleanlinesanditscleaning

method(一种表面清洁度高的

碳化硅衬底及其清洁方法)

ourCompanyInvention

patent

PRCZL202110750285.0

APENDIXVISTATUTORYANDGENERALINFORMATION

–VI-14–

---

No.PatentPatentownerPatentcategory

Placeof

registrationPatentnumber

13.ASiCcrystal,asedcrystalused

therein,andamethodof

preparingthesedcrystal(一

种碳化硅晶体、其使用的籽晶

及籽晶的制备方法)

ourCompanyInvention

patent

PRCZL202110691438.9

14.AhighqualitySiCsubstrateand

itspreparationmethod(一种高

品质碳化硅衬底及其制备方法)

ourCompanyInvention

patent

PRCZL202110546515.1

15.ASiCcrystalanditspreparation

method(一种碳化硅晶体及其

制备方法)

ourCompanyInvention

patent

PRCZL202110484763.8

16.Areactorelementforpreparing

crystalsbythePVTmethod

andamethodofuseand

aplicationthereof(一种用于

PVT法制备晶体的反应器元件

及其使用方法和应用)

ourCompanyInvention

patent

PRCZL202110482795.4

17.AhighqualitySiCcrystal

growingmethodandevice

(一种高品质碳化硅晶体的生长

方法及装置)

ourCompanyInvention

patent

PRCZL202110200873.7

18.Apreparationmethodandgrowth

deviceforN-typeSiCcrystals

(一种N型碳化硅晶体的制备方

法及生长装置)

ourCompanyInvention

patent

PRCZL202011637816.7

19.SiCsubstrate,ingotandits

preparationmethod(碳化硅衬

底、晶锭及其制备方法)

ourCompanyInvention

patent

PRCZL202011349480.4

APENDIXVISTATUTORYANDGENERALINFORMATION

–VI-15–

---

No.PatentPatentownerPatentcategory

Placeof

registrationPatentnumber

20.Acrucible,deviceand

aplicationforN-typeSiC

monocrystalgrowth(一种N型

碳化硅单晶生长用坩埚、装置

及应用)

ourCompanyInvention

patent

PRCZL202011344171.8

21.ASiCbackingdislocation

recognitionmethodandsystem

(一种碳化硅衬底位错自动识别

方法及系统)

ourCompanyInvention

patent

PRCZL202011279607.X

22.ASiCmonocrystalineingot,

backinganditspreparation

method(一种碳化硅单晶锭、

衬底及其制备方法)

ourCompanyInvention

patent

PRCZL202011344165.2

23.SiCcrystals,ingots,and

preparationmethodsthereof

(碳化硅晶片、晶锭及其制备方

法)

ourCompanyInvention

patent

PRCZL202011344157.8

24.SiCcrystals,ingots,and

preparationmethodsthereof

(碳化硅晶片、晶锭及其制备方

法)

ourCompanyInvention

patent

PRCZL202011349487.6

25.ASiCmonocrystalandits

productionmethodand

aplication(一种碳化硅单晶及

其生产方法和应用)

ourCompanyInvention

patent

PRCZL202011344150.6

26.Apreparationmethodofhigh

qualitySiCmonocrystaland

SiCmonocrystal(一种高质量

碳化硅单晶的制备方法及碳化

硅单晶)

ourCompanyInvention

patent

PRCZL202011257244.X

APENDIXVISTATUTORYANDGENERALINFORMATION

–VI-16–

---

No.PatentPatentownerPatentcategory

Placeof

registrationPatentnumber

27.Apreparationmethodofhigh

qualitySiCmonocrystaland

SiCmonocrystal(一种高质量

碳化硅单晶的制备方法及碳化

硅单晶)

ourCompanyInvention

patent

PRCZL202011255128.4

28.Adislocationidentification

methodforSiCcrystalsand

SiCcrystalswithaplications

(一种碳化硅晶片的位错识别方

法及碳化硅晶片与应用)

ourCompanyInvention

patent

PRCZL202011003137.4

29.Amethodandeviceforgrowing

SiCcrystals(一种碳化硅晶体

生长方法及装置)

ourCompanyInvention

patent

PRCZL202010956155.8

30.Amethodandevicefor

detectingtheresistivityofhigh

puritySiCcrystals(一种高纯

碳化硅晶体电阻率的检测方法

和装置)

ourCompanyInvention

patent

PRCZL202010777544.4

31.ASiCmonocrystalanditsPVT

productionmethodand

aplication(一种碳化硅单晶及

其PVT法生产方法和应用)

ourCompanyInvention

patent

PRCZL202010664355.6

32.Thermalradiationreflection

deviceforproducingSiC

monocrystalsandits

preparationmethodand

aplication(生产碳化硅单晶用

热辐射反射装置及其制备方法

与应用)

ourCompanyInventionPRCZL202010663166.7

APENDIXVISTATUTORYANDGENERALINFORMATION

–VI-17–

---

No.PatentPatentownerPatentcategory

Placeof

registrationPatentnumber

33.Acrystalcutingproces

optimizationmethodand

device(一种晶体切割工艺优化

方法及装置)

ourCompanyInvention

patent

PRCZL202010461911.X

34.AhighqualitySiCmonocrystal

preparationmethodandits

device(一种高质量碳化硅单晶

的制备方法及其装置)

ourCompanyInvention

patent

PRCZL202010361772.3

35.Amethodandequipmentfor

predictingtheoveral

temperaturefieldinaSiC

singlecrystalfurnace(一种预

测碳化硅单晶炉内整体温度场

的方法及设备)

ourCompanyInvention

patent

PRCZL202010322263.X

36.AmethodofprocesingSiC

crystals(一种碳化硅晶体的加

工方法)

ourCompanyInvention

patent

PRCZL202010270072.3

37.Ahighqualityn-typeSiCandits

preparationmethod(一种高质

量n型碳化硅及其制备方法)

ourCompanyInvention

patent

PRCZL202010236876.1

38.AhighqualitySiCmonocrystal,

substrateanditseficient

preparationmethod(一种高质

量碳化硅单晶、衬底及其高效

制备方法)

ourCompanyInvention

patent

PRCZL201911368211.X

39.Adeviceforpreparing

monocrystalsandamethodfor

preparingSiCmonocrystals

(一种制备单晶的装置和碳化硅

单晶的制备方法)

ourCompanyInvention

patent

PRCZL201911370512.6

APENDIXVISTATUTORYANDGENERALINFORMATION

–VI-18–

---

No.PatentPatentownerPatentcategory

Placeof

registrationPatentnumber

40.ASiCmonocrystal,asubstrate

anditspreparationmethod(一

种碳化硅单晶、衬底及其制备

方法)

ourCompanyInvention

patent

PRCZL201911368201.6

41.Alarge-sizeSiCmonocrystal,a

substrate,amethodof

preparationandadevicefor

use(一种大尺寸碳化硅单晶、

衬底及制备方法和使用的装置)

ourCompanyInvention

patent

PRCZL201911349995.1

42.AdopedSiCmonocrystal,a

backing,andamethodof

preparingthesameanda

deviceforusethereof(一种掺

杂碳化硅单晶、衬底及制备方

法和使用的装置)

ourCompanyInvention

patent

PRCZL201911349956.1

43.Akindoflongcrystalfurnace

forPVTmethodofpreparing

monocrystalanditsaplication

(一种用于PVT法制备单晶的长

晶炉及其应用)

ourCompanyInvention

patent

PRCZL201911347904.0

44.Acrystalgrowthprediction

methodandevice(一种晶体

生长预测方法及装置)

ourCompanyInvention

patent

PRCZL201911033270.1

45.Amethodandsystemfor

detectingSiCdefects(一种碳

化硅缺陷的检测方法和系统)

ourCompanyInvention

patent

PRCZL201910951137.8

46.PreparationofSiCmonocrystals

andtheiraplications(碳化硅

单晶的制备装置及其应用)

ourCompanyInvention

patent

PRCZL201911032080.8

APENDIXVISTATUTORYANDGENERALINFORMATION

–VI-19–

---

No.PatentPatentownerPatentcategory

Placeof

registrationPatentnumber

47.High-qualityandhigh-purity

semi-insulatingSiC

monocrystal,substrateandits

preparationmethod(高质量高

纯半绝缘型碳化硅单晶、衬底

及其制备方法)

ourCompanyInvention

patent

PRCZL201910631401.X

48.Amethodandevicefor

detectinglargesizemicrotubes

insemiconductorSiC

substrates(一种检测半导体碳

化硅衬底中大尺寸微管的方法

及装置)

ourCompanyInvention

patent

PRCZL201910477578.9

49.ASiCsinglecrystalanditsPVT

longcrystalmethod(一种碳化

硅单晶及其PVT长晶方法)

ourCompanyInvention

patent

PRCZL201910344555.0

50.ASiCcrystalanditspreparation

method(一种碳化硅晶体及其

制备方法)

ourCompanyInvention

patent

PRCZL201910324913.1

51.AmethodforpolishingSiC

monolithicwafers(一种碳化硅

单晶片磨抛方法)

ourCompanyInvention

patent

PRCZL201910001876.0

52.Anadjustableheatfieldstructure

forpreparationofSiC

monocrystals(一种用于制备碳

化硅单晶的可调节热场结构)

ourCompanyInvention

patent

PRCZL201811303468.2

53.Amethodtoimprovethe

uniformityoftemperaturefield

distributionduringthegrowth

ofSiCmonocrystal(一种提高

碳化硅单晶生长过程中温度场

分布均匀度的方法)

ourCompanyInvention

patent

PRCZL201811302534.4

APENDIXVISTATUTORYANDGENERALINFORMATION

–VI-20–

---

No.PatentPatentownerPatentcategory

Placeof

registrationPatentnumber

54.AhighqualitySiCcrystal

preparationmethodandits

device(一种高品质碳化硅晶体

的制备方法及其装置)

ourCompanyInvention

patent

PRCZL201811303446.6

55.ASiCmonocrystalgrowing

device(一种碳化硅单晶生长装

置)

ourCompanyInvention

patent

PRCZL201811302583.8

56.Amethodofgrowinghigh-purity

SiCmonocrystals(一种高纯碳

化硅单晶的生长方法)

ourCompanyInvention

patent

PRCZL201811303457.4

57.ASiCmonocrystalgrowing

method(一种碳化硅单晶生长

方法)

ourCompanyInvention

patent

PRCZL201811302567.9

58.AmethodofpreparingaSiC

chemicalmechanicalpolishing

solutionwithimprovedpH

stability(一种制备pH稳定性提

高的碳化硅化学机械抛光液的

方法)

ourCompanyInvention

patent

PRCZL201811303464.4

59.AnimprovedSiCmonocrystal

growthdeviceandits

aplicationinSiCmonocrystal

growth(一种改良的碳化硅单

晶生长装置及在碳化硅单晶生

长中的应用)

ourCompanyInvention

patent

PRCZL201811302533.X

60.AhighqualitysinglecrystalSiC

anditspreparationmethod(一

种高质量单晶碳化硅及其制备

方法)

ourCompanyInvention

patent

PRCZL201811303459.3

61.SiCmonocrystalcontinuous

growingmethods(碳化硅单晶

的连续长晶方法)

ourCompanyInvention

patent

PRCZL201811302584.2

APENDIXVISTATUTORYANDGENERALINFORMATION

–VI-21–

---

No.PatentPatentownerPatentcategory

Placeof

registrationPatentnumber

62.Amethodtoimprovethequality

ofcontinuouslygrownSiC

monocrystals(一种提高连续生

长碳化硅单晶品质的方法)

ourCompanyInvention

patent

PRCZL201811303469.7

63.Amethodtoimprovethegrowth

qualityofPVTSiC

monocrystals(一种提高PVT法

碳化硅单晶生长质量的方法)

ourCompanyInvention

patent

PRCZL201811303465.9

64.Alarge-sizehigh-puritySiC

monocrystal,monocrystal

substrateanditspreparation

method(一种大尺寸高纯碳化

硅单晶、单晶衬底及其制备方

法)

ourCompanyInvention

patent

PRCZL201811204726.1

65.Arapidpreparationmethodfor

highflatnesandlowdamage

tomonocrystalineSiC

substrate(一种高平整度、低损

伤单晶碳化硅衬底的快速制备

方法)

ourCompanyInvention

patent

PRCZL201811205285.7

66.AhighpuritySiC

monocrystalinebacking(一种

高纯碳化硅单晶衬底)

ourCompanyInvention

patent

PRCZL201811204666.3

67.Ahighqualitysemi-insulating

SiCmonocrystalandbacking

dopedwithasmalamountof

vanadium

(一种掺杂少量钒的高质量半绝

缘型碳化硅单晶及衬底)

ourCompanyInvention

patent

PRCZL201811204690.7

68.Thermalfieldstructureofa

growingSiCmonocrystal(一

种生长碳化硅单晶的热场结构)

ourCompanyInvention

patent

PRCZL201811204668.2

APENDIXVISTATUTORYANDGENERALINFORMATION

–VI-22–

---

No.PatentPatentownerPatentcategory

Placeof

registrationPatentnumber

69.Ahighflatnes,lowdamage

largediametermonocrystaline

SiCbacking(一种高平整度、

低损伤大尺寸单晶碳化硅衬底)

ourCompanyInvention

patent

PRCZL201811205291.2

70.Amethodofpreparinghigh

qualitysemi-insulatingSiC

monocrystalinesubstrates(一

种制备高质量的半绝缘型碳化

硅单晶衬底的方法)

ourCompanyInvention

patent

PRCZL201811205277.2

71.Preparationofhigh-quality

semi-insulatingSiC

monocrystalsdopedwitha

smalamountofvanadiumand

asubstrate(掺杂少量钒的高质

量半绝缘型碳化硅单晶及衬底

的制备方法)

ourCompanyInvention

patent

PRCZL201811204702.6

72.Amethodofpreparing

high-puritysemi-insulatingSiC

monocrystals(一种高纯半绝缘

型碳化硅单晶的制备方法)

ourCompanyInvention

patent

PRCZL201711121551.3

73.Agrowthmethodforsupresing

carboninclusionsdefectsin

SiCmonocrystals(一种抑制碳

化硅单晶中碳包裹体缺陷的生

长方法)

ourCompanyInvention

patent

PRCZL201710520916.3

74.Amethodofpreparinga

high-puritysemi-insulatingSiC

substrate(一种高纯半绝缘型碳

化硅衬底的制备方法)

ourCompanyInvention

patent

PRCZL201710019521.5

APENDIXVISTATUTORYANDGENERALINFORMATION

–VI-23–

---

No.PatentPatentownerPatentcategory

Placeof

registrationPatentnumber

75.Asedcrystalshaftanda

methodofgrowingSiCin

liquidphase(一种液相生长碳

化硅的籽晶轴及方法)

ourCompanyInvention

patent

PRCZL201610505971.0

76.Adeviceandmethodforgrowing

SiCcrystalsbyliquidphase

method(一种液相法生长碳化

硅晶体的装置及方法)

ourCompanyInvention

patent

PRCZL201610480812.X

77.Akindofliquid-phasegrowing

SiCsedcrystalshaftdevice

(一种液相生长碳化硅籽晶轴装

置)

ourCompanyInvention

patent

PRCZL201610462617.4

78.Amethodfordetectingthestep

widthonthesurfaceofSiC

crystals(一种碳化硅晶体表面

台阶宽度的检测方法)

ourCompanyInvention

patent

PRCZL201610464045.3

79.Amethodforliquidphase

epitaxyofSiCcrystalsin

multiplecrucibles(一种多坩埚

液相外延碳化硅晶体的方法)

ourCompanyInvention

patent

PRCZL201610463988.4

80.Amethodandeviceforgrowing

high-puritysemi-insulatingSiC

monocrystals(一种生长高纯半

绝缘型碳化硅单晶的方法及装

置)

ourCompanyInvention

patent

PRCZL201510223992.9

81.Amethodandevicefor

corosionofSiCcrystals(一种

碳化硅晶片腐蚀的方法和装置)

ourCompanyInvention

patent

PRCZL201410116764.7

APENDIXVISTATUTORYANDGENERALINFORMATION

–VI-24–

---

No.PatentPatentownerPatentcategory

Placeof

registrationPatentnumber

82.Amechanicalpolishingsolution

forSiCandamethodof

mechanicalpolishingusingthe

same(一种碳化硅用机械抛光

液及采用其进行机械抛光的方

法)

ourCompanyInvention

patent

PRCZL201410112684.4

83.Amethodandevicefor

grindingthendfaceofSiC

crystals(一种磨削碳化硅晶体

端面的方法及装置)

ourCompanyInvention

patent

PRCZL201410036092.9

84.Amethodandequipmentfor

cutinglargediameterSiC

monocrystalsusingdiamond

wire(一种利用金刚石线切割

大尺寸碳化硅单晶的方法和设

备)

ourCompanyInvention

patent

PRCZL201310728631.0

85.Surfacepolishingmethodfor

largediameterandhigh

hardnes6H-SiCmonolithic

wafers(大尺寸高硬度6H-碳化

硅单晶片的表面抛光方法)

ourCompanyInvention

patent

PRCZL200610043816.8

86.Dicingmethodforlargediameter

SiCsinglecrystals(大尺寸碳

化硅单晶的切割方法)

ourCompanyInvention

patent

PRCZL200510044587.7

(d)Domainames

AsatheLatestPracticableDate,weownedthefolowingdomainameswhichweconsider

tobeormaybematerialtourbusines:

No.DomainNameRegisteredOwnerExpiryDate

1.sic.courCompany2027.11.03

2.shanghaiyuefu.cnShanghaiYuefu2027.11.07

APENDIXVISTATUTORYANDGENERALINFORMATION

–VI-25–

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Saveasaforesaid,asoftheLatestPracticableDate,therewerenothertradeorservice

marks,patents,intelectualorindustrialpropertyrightswhichwerematerialinrelationtour

busines.

C.FURTHERINFORMATIONABOUTOURDIRECTORS,SUPERVISORSANDSENIOR

MANAGEMENT

1.DisclosureofinterestsofDirectors,SupervisorsandChiefExecutiveoftheCompany

Saveasdisclosedbelow,imediatelyfolowingthecompletionoftheGlobalOfering

(asumingthat(i)theOver-alotmentOptionisnotexercised,(i)nonewSharesareisuedunder

our2024RestrictedShareIncentiveSchemeand(i)notherchangesaremadetotheisued

sharecapitalofourCompanybetwentheLatestPracticableDateandListing),sofarasour

Directorsareaware,noneofourDirectors,Supervisorsorchiefexecutivehasanyinterestsor

shortpositionsinourShares,underlyingSharesandebenturesofourCompanyoritsasociated

corporations(withinthemeaningofPartXVoftheSFO)whichwilhavetobenotifiedtour

CompanyandtheStockExchangepursuantoDivisions7and8ofPartXVoftheSFO(including

interestsandshortpositionswhicheorsheistakenordemedtohaveundersuchprovisionsof

theSFO)orwhichwilberequired,pursuantoSection352oftheSFO,toberecordedinthe

registereferedtotherein,orwhichwilberequiredtobenotifiedtourCompanyandtheStock

ExchangepursuantotheModelCodeforSecuritiesTransactionsbyDirectorsofListed

CompaniescontainedintheListingRules.

(a)InterestinourCompany

NamePositionNatureofinterest

(1)

Numberand

clasofShares/underlying

Shares

Aproximate

percentageof

shareholdinginthe

totalisuedShares

imediatelypriorto

theGlobalOfering

Aproximate

percentageof

shareholdingin

thetotalisued

Sharesimediately

aftertheGlobal

Ofering

(2)

Mr.ZongChairmanoftheBoard,

executiveDirectorand

generalmanager

Beneficialowner129,302,726

AShares

30.09%27.08%

Interestincontroled

corporation

38,038,884

AShares

(3)

8.85%7.12%

Mr.GaoChaoExecutiveDirectorandchief

technologyoficer

Beneficialowner35,000

AShares

(4)

0.008%0.007%

APENDIXVISTATUTORYANDGENERALINFORMATION

–VI-26–

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Notes:

(1)Alintereststatedarelongposition.

(2)Thecalculationisbasedontheasumptionthat(i)theOver-alotmentOptionisnotexercised,(i)nonewShares

areisuedunderour2024RestrictedShareIncentiveSchemeand(i)notherchangesaremadetotheisued

sharecapitalofourCompanybetwentheLatestPracticableDateandListing.

(3)AsoftheLatestPracticableDate,Mr.Zong,asthesolexecutiveandgeneralpartnerofeachofShanghaiMaiming

andShanghaiZhuao,wasresponsibleformanagementandexercisingthevotingrightsatachingtotheSharesheld

byeachofShanghaiMaimingandShanghaiZhuao,inacordancewiththepartnershipagremententeredinto

amongthegeneralandlimitedpartnersofeachofShanghaiMaimingandShanghaiZhuao,respectively.Therefore,

Mr.Zongwasdemedtobeinterestedinthe23,133,000ASharesand12,900,000ASharesheldbyShanghai

MaimingandShanghaiZhuao,respectively.ByvirtueofPartXVoftheSFO,interestincontroledcorporationalso

includesthe2,005,884ASharesrepurchasedbyourCompanyastreasurysharesasoftheLatestPracticableDate.

(4)RepresentsMr.GaoChao’sentitlementoreceiveupto35,000ASharesifanduponthevestingofrestricted

Sharesgrantedtohimunderthe2024RestrictedShareIncentiveScheme,subjectotheconditions(including

vestingconditions)ofthoserestrictedShares.

2.DisclosureofInterestsofSubstantialShareholders

(a)InterestsinourCompany

Forinformationonthepersonswhowil,imediatelyfolowingthecompletionoftheGlobal

Oferingandasumingthat(i)theOver-alotmentOptionisnotexercised,(i)nonewSharesare

isuedunderour2024RestrictedShareIncentiveSchemeand(i)notherchangesaremadeto

theisuedsharecapitalofourCompanybetwentheLatestPracticableDateandListing,having

orbedemedortakentohaveinterestsorshortpositionsinourSharesorunderlyingShares

whichwouldberequiredtobedisclosedtourCompanyandtheStockExchangeunderthe

provisionsofDivisions2and3ofPartXVoftheSFO,ordirectlyorindirectlybeinterestedin

10%ormoreofthenominalvalueofanyclasofsharecapitalcaryingrightstovoteinal

circumstancesatgeneralmetingsofourCompany,sethesectionheaded“Substantial

Shareholders”.

(b)InterestsoftheSubstantialShareholdersofOtherMembersofOurGroup

AsoftheLatestPracticableDate,saveasdisclosedinthesectionheaded“Substantial

Shareholders”,ourDirectorsarenotawareofanyotherperson(otherthanourDirectors,

SupervisorsorchiefexecutiveofourCompany)whowil,imediatelyfolowingthecompletion

oftheGlobaloferingandasumingthat(i)theOver-alotmentOptionisnotexercised,(i)no

newSharesareisuedunderour2024RestrictedShareIncentiveSchemeand(i)nother

changesaremadetotheisuedsharecapitalofourCompanybetwentheLatestPracticableDate

APENDIXVISTATUTORYANDGENERALINFORMATION

–VI-27–

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andListing,directlyorindirectly,beinterestedin10%ormoreofthenominalvalueofanyclas

ofsharecapitalcaryingrightstovoteinalcircumstancesatgeneralmetingsofanyother

memberofourGroup.

3.ServiceContracts

WehaventeredintoaservicecontractorapointmentleterwitheachofourDirectorsand

Supervisors.Theprincipalparticularsoftheseservicecontractsandapointmentleterscomprise

(a)thetermoftheservice;(b)subjectoterminationinacordancewiththeirespectiveterm;and

(c)adisputeresolutionprovision.Theservicecontractsandapointmentletersmayberenewedin

acordancewithourArticlesofAsociationandtheaplicablelaws,rulesandregulationsfrom

timetotime.

Saveasdisclosedabove,noneoftheDirectorsorSupervisorshasorisproposedtohavea

servicecontractwithanymemberofourGroup(otherthancontractsexpiringordeterminableby

therelevantemployerwithinoneyearwithouthepaymentofcompensation(otherthanstatutory

compensation).

4.Director’sandSupervisors’Remuneration

Saveasdisclosedinthesectionheaded“Directors,SupervisorsandSeniorManagement”and

Note13to“ApendixI—Acountants’Report”forthethreyearsendedDecember31,2022,

2023and2024andthethremonthsendedMarch31,2025,noneofourDirectorsorSupervisors

receivedotheremunerationsorbenefitsinkindfromus.

5.Disclaimers

SavedasdisclosedinthisProspectus:

(a)noneofourDirectors,Supervisorsoranyofthepartieslistedin“—E.Other

Information—4.QualificationsandConsentsofExperts”belowis:

(i)interestedinourpromotion,orinanyasetswhich,withinthetwoyears

imediatelyprecedingthedateofthisdocument,havebenacquiredordisposed

ofbyorleasedtous,orareproposedtobeacquiredordisposedofbyorleasedto

ourCompany;

(i)materialyinterestedinanycontractorarangementsubsistingathedateofthis

documentwhichisignificantinrelationtourbusines;

APENDIXVISTATUTORYANDGENERALINFORMATION

–VI-28–

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(b)saveinconectionwiththeHongKongUnderwritingAgrementandtheInternational

UnderwritingAgrement,noneofthepartieslistedin“—E.OtherInformation—4.

QualificationsandConsentsofExperts”below:

(i)isinterestedlegalyorbeneficialyinanysharesinanymemberofourGroup;or

(i)hasanyright(whetherlegalyenforceableornot)tosubscribeforortonominate

personstosubscribeforanysecuritiesinanymemberofourGroup;

(c)noneofourDirectorsorSupervisorsismaterialyinterestedinanycontractor

arangementsubsistingathedateofthisdocumentwhichisignificantinrelationto

thebusinesofourGrouptakenasawhole;

(d)noneofourDirectorsorSupervisorsortheircloseasociatesoranyshareholdersofour

CompanywhototheknowledgeofourDirectorsownsmorethan5%ofourisued

sharecapitalhasanyinterestinourtopfivecustomersorsupliers;and

(e)noneofourDirectorsorSupervisorsisadirectororemployeofacompanythathasan

interestinthesharecapitalofourCompanywhich,oncetheHSharesarelistedonthe

StockExchange,wouldhavetobedisclosedpursuantoDivisions2and3ofPartXV

oftheSFO.

D.OUR2024RESTRICTEDSHAREINCENTIVESCHEME

Thefolowingisasumaryoftheprincipaltermsofthe2024RestrictedShareIncentive

Schemeasaprovedbytheanualgeneralmetingfortheyear2023oftheCompanydatedMay

17,2024(the“2024RestrictedShareIncentiveScheme”).Thetermsofthe2024Restricted

ShareIncentiveSchemearenotsubjectotheprovisionsofChapter17oftheListingRulesas

theydonotinvolveanygrantofrestrictedSharesbyourCompanyaftertheListing.Thetermsof

the2024RestrictedShareIncentiveSchemearesumarizedasbelow:

(i)Purpose

Thepurposeofthe2024RestrictedShareIncentiveSchemeistofurtherestablishand

enhancetheCompany’slong-termincentivemechanism,atractandretainoutstandingtalents,

motivateouremployesandefectivelyaligntheinterestsofShareholders,theCompany,andour

employes,facilitatingthelong-termandsustainabledevelopmentofourGroup.

APENDIXVISTATUTORYANDGENERALINFORMATION

–VI-29–

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(i)Administration

The2024RestrictedShareIncentiveSchemeshalbesubjectodecisionsofthe

Shareholders’generalmeting,administrationoftheBoardandthesupervisionoftheSupervisory

Comite.

(i)Selectedparticipants

Selectedparticipantsunderthe2024RestrictedShareIncentiveSchemearecoretechnology

andbusinestalentswhoareimportantfortheCompany’sfutureoperationandevelopment,

includingforeignemployeswhilexcludingindependentDirectors,Supervisorsandanyperson

prohibitedbyArticle8oftheMeasuresfortheAdministrationofEquityIncentivesofListed

Companiestobeligibleparticipants.

TheselectedparticipantshalbemployedbytheCompanyoritsubsidiariesathetime

therelevantrestrictedSharesaregrantedanduringtheasesmentperiodofthe2024Restricted

ShareIncentiveScheme.

(iv)SourceandmaximumnumberofShares

TherestrictedSharestobegrantedunderthe2024RestrictedShareIncentiveSchemeshal

beASharesrepurchasedbyourCompanyfromthesecondarymarketfromtimetotime,and/orA

SharestobeisuedbyourCompanytotheselectedparticipants.EachrestrictedSharegranted

representstherightopurchaseoneASharewithintheagredperiodathegrantprice.The

maximumnumberofrestrictedSharesthatcanbegrantedunder2024RestrictedShareIncentive

Schemeis5,080,000AShares,representingaproximately1.18%ofthetotalisuedsharecapital

athetimeofadoptionofthe2024RestrictedShareIncentiveScheme.

(v)Termofthescheme

TheRestrictedShareIncentiveSchemeshalbefectivefromthedateofgrantofthe

restrictedSharesunderthe2024RestrictedShareIncentiveSchemeuptothedatewhenthe

restrictedSharesgrantedhavealbenvestedorlapsed,providedthathetermofthe2024

RestrictedShareIncentiveSchemeshalnotexced60months(asthecasemaybe).

(vi)GrantoftherestrictedShares

ThegrantdateshalbeatradingdayandshalbedeterminedbytheBoard.OurCompany

shalgrantandanouncetherestrictedSharestobegrantedtoselectedparticipantsunderthefirst

trancheofgrantwithin60daysafterthedateofaprovalofthe2024RestrictedShareIncentive

APENDIXVISTATUTORYANDGENERALINFORMATION

–VI-30–

---

SchemebytheShareholders’generalmeting.Failuretocompletetheprocedureswithinsuchtime

wilresultinterminationofthe2024RestrictedShareIncentiveSchemeandlapseoftherestricted

Sharesthathavenotbengranted.ThegrantdateforthereservedrestrictedShareshalbe

determinedbytheBoardwithin12monthsaftertheaprovaldateofthe2024RestrictedShare

IncentiveSchemebytheShareholders’meting.Theperioduringwhichthegrantsofequity

incentivesareprohibited,aspecifiedundertheMeasuresfortheAdministrationofEquity

IncentivesofListedCompanies,shalnotbeincludedinthecalculationoftheabovementioned

60-dayperiod.

ThegrantpriceoftherestrictedShareshalbeRMB32.00,subjectoanyadjustment

pursuantothetermsofthe2024RestrictedShareIncentiveScheme.RestrictedSharesrestricted

Sharesgrantedshalnotbetransferedorusedfordebtguaranteorpayment.

Amongthemaximum5,080,000restrictedAShareswhichcouldbegrantedunderthe2024

RestrictedShareIncentiveScheme,4,895,000AShareshavebengranted.185,000ASharesare

reservedquotaforfurthergrantoselectedparticipants,thenamesofwhichshalbedetermined

within12monthsuponaprovalofthe2024RestrictedShareIncentiveSchemebythe

Shareholders’generalmetingofourCompany.AsoftheLatestPracticableDate,alofthe

reservedquotaof185,000AShareshasbenautomaticalylapsedasnograntewasfurther

identifiedbyendofsuchperiodpursuantothetermsofthe2024RestrictedShareIncentive

Scheme.

(vi)Grantconditions

TheselectedparticipantsarentitledtobegrantedrestrictedSharesunderthe2024

RestrictedShareIncentiveSchemeonlyifthefolowingconditionsweremet:

(a)withrespectotheCompany,noneofthefolowingcircumstanceshavingocured:

(1)anauditreportwithanadverseopinionoradisclaimerofopinionhasbenisued

bythecertifiedpublicacountantswithrespectotheCompany’sacountant’s

reportforthemostrecentfiscalyear;

(2)anauditreportwithanadverseopinionoradisclaimerofopinionhasbenisued

bythecertifiedpublicacountantswithrespectotheinternalcontrolreport

containedinacountant’sreportforthemostrecentfiscalyear;

(3)theCompanyhasnotdistributedividendsinacordancewiththelawsand

regulations,ourArticlesofAsociationorourpublicomitmentwithinthemost

recent36monthsafteritslisting;

APENDIXVISTATUTORYANDGENERALINFORMATION

–VI-31–

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(4)aplicablelawsandregulationsprohibitheimplementationofanyshareincentive

scheme;or

(5)anyothercircumstancesrecognizedbytheCSRC.

(b)withrespectothegrante,noneofthefolowingcircumstanceshavingocured:

(1)thegrantehasbenregardedasaninapropriatepersonbytheShanghaiStock

Exchangewithinthemostrecent12months;

(2)thegrantehasbenregardedasaninapropriatepersonbytheCSRCorits

dispatchedoficewithinthemostrecent12months;

(3)thegrantehasreceivedadministrativepenaltiesorprohibitedfromenteringinto

thesecuritiesmarketbytheCSRCoritsdispatchedoficewithinthemostrecent

12monthsasaresultofanymaterialnon-compliancewithrelevantlawsand

regulations;

(4)thegranteisnotqualifiedtoserveasadirectororseniormanagementacording

tothePRCompanyLaw;

(5)thegranteisprohibitedfromparticipatinginanyshareincentiveplanoflisted

companiesacordingtoaplicablelawsandregulations;or

(6)anyothercircumstancesrecognizedbytheCSRC.

(vi)Vestingconditionsandschedule

Theselectedparticipantsgrantedunderthe2024RestrictedShareIncentiveSchemewilonly

bevestedifthefolowingconditionsweremet:

(a)theconditionsetoutunderparagraph(vi)abovearefulfiled;

(b)therelevantgrantehasbenemployedwiththeGroupformorethan12monthsbefore

anyvestingdate;and

(c)theaplicableanualperformanceasesmentargetsoftheCompanyandperformance

apraisalrequirementsoftherelevantgranteasetoutunderthe2024RestrictedShare

IncentiveSchemeareachieved.

APENDIXVISTATUTORYANDGENERALINFORMATION

–VI-32–

---

TherestrictedSharesgrantedshalbevestedinacordancewiththefolowingvesting

schedule,subjectosatisfactionoftheabovevestingconditions:

VestingscheduleVestingperiodVestingpercentage

ThefirstperiodofvestingFromthefirstradingdayafterthe

12-monthaniversaryfromthedateof

grantothelastradingdaybeforethe

24-monthaniversaryofthedateofgrant

30%

ThesecondperiodofvestingFromthefirstradingdayafterthe

24-monthaniversaryfromthedateof

grantothelastradingdaybeforethe

36-monthaniversaryofthedateofgrant

30%

ThethirdperiodofvestingFromthefirstradingdayafterthe

36-monthaniversaryfromthedateof

grantothelastradingdaybeforethe

48-monthaniversaryofthedateofgrant

40%

ThevestingoftherestrictedSharesgrantedshalbeonatradingdaywithinthetermofthe

2024RestrictedShareIncentiveScheme,whichshalnotfalinthefolowingperiods,(i)15days

beforethepublicationofanyanualreportandinterimreport,(i)fivedaysbeforethepublication

ofanyquarterlyreport,earningsforecastandpreliminaryearningsestimate,(i)theperiod

startingfromthedateofanysignificantprice-sensitiveincidentilthedateofitspublication;and

(iv)anyotherperiodprohibitedbytheCSRCandShanghaiStockExchange.

(ix)Lock-upforDirectorsandtheseniormanagementeam

TheanualtransferableSharesforagrantewhoisaDirectororseniormanagementmember

duringhisorheremploymentshalnotexced25%ofthetotalSharesheorsheholds.NoShare

canbetransferedwithinsixmonthsafterterminationofhisorheremployment.Incomegained

throughsaleofShareswithinsixmonthsofthepurchaseorpurchaseofShareswithinsixmonths

ofthesaleshalbelongtotheCompanyandwilbeforfeitedbytheBoard.AnysaleofSharesis

alsosubjectotherelevantrequirementsunderaplicablelaws.

(x)OutstandingrestrictedSharesgranted

AsoftheLatestPracticableDate,thenumberofoutstandingrestrictedSharesgrantedunder

the2024RestrictedShareIncentiveSchemewas4,895,000,representingaproximately1.03%of

theisuedSharesimediatelyfolowingthecompletionoftheListing(asumingthat(i)the

APENDIXVISTATUTORYANDGENERALINFORMATION

–VI-33–

---

Over-alotmentOptionisnotexercised,(i)nonewSharesareisuedunderour2024Restricted

ShareIncentiveSchemeand(i)nochangestourisuedandoutstandingsharesbetwenthe

LatestPracticableDateandtheListing).AsoftheLatestPracticableDate,alofthereserved

quotaof185,000restrictedAShareshasbenautomaticalylapsedasnograntewasfurther

identifiedbyendoftheperiodaspecifiedinthetermsofthe2024RestrictedShareIncentive

Schemes.AsoftheLatestPracticableDate,theCompanyhasrepurchasedanagregateof

2,005,884AShares,whichwereheldintherepurchasestockacountestablishedinthenameof

theCompanyandwerexpectedtobeusedforemployestockownershiplansorequity

incentives.TheCompanyhasnotisuedorhadanyiminentplantoisueanynewASharesfor

suchpurpose.

ThefolowingtablesetsforththenumberofoutstandingrestrictedSharesgrantedto

Directors,seniormanagementorconectedpersonsofourCompanyunderthe2024Restricted

ShareIncentiveSchemes:

Nameofgrante

Positioninour

CompanyDateofgrant

Numberof

restrictedShares

grantedGrantPriceVestingperiod

Aproximate

percentageof

isuedShares

imediately

aftercompletion

oftheGlobal

Ofering

(1)

Mr.GaoChao

.

Executive

Directorand

chief

technology

oficer

March27,

35,000RMB32.0030%,30%and40%ofthe

restrictedSharesgrantedunder

the2024RestrictedShare

IncentiveSchemewilvestin

eachofthethrevestingperiods

thatocurbetwenthefirst

tradingdayafterthe12-month

aniversaryfromthedateof

grantandthelastradingdayup

tothe48-monthaniversaryof

thedateofgrant,respectively.

0.01%

Ms.YouYing

.

Chiefinancial

oficer

March27,

150,000RMB32.000.03%

Notes:

(1)Thecalculationisbasedontheasumptionthat(i)theOver-alotmentOptionisnotexercised,(i)nonewShares

areisuedunderthe2024RestrictedShareIncentiveScheme,and(i)notherchangesaremadetotheisued

sharecapitalofourCompanybetwentheLatestPracticableDateandListing.

APENDIXVISTATUTORYANDGENERALINFORMATION

–VI-34–

---

ThetablebelowsetsforththedetailsofoutstandingrestrictedSharesgrantedtother

grantes(excludingDirectors,seniormanagementandconectedpersonsofourCompany)under

the2024RestrictedShareIncentiveSchemes:

Numberof

grantes

(2)

Dateofgrant

Numberof

restrictedShares

grantedGrantPriceVestingperiod

Aproximate

percentageof

isuedShares

imediatelyafter

completionofthe

GlobalOfering

(1)

.

July3,20244,080,000RMB32.0030%,30%and40%ofthe

restrictedSharesgrantedunder

the2024RestrictedShare

IncentiveSchemewilvestin

eachofthethrevesting

periodsthatocurbetwenthe

firstradingdayafterthe

12-monthaniversaryfromthe

dateofgrantandthelast

tradingdayuptothe48-month

aniversaryofthedateofgrant,

respectively.

0.85%

.

March27,2025630,000RMB32.000.13%

Notes:

(1)Thecalculationisbasedontheasumptionthat(i)theOver-alotmentOptionisnotexercised,(i)nonewShares

areisuedunderthe2024RestrictedShareIncentiveScheme,and(i)notherchangesaremadetotheisued

sharecapitalofourCompanybetwentheLatestPracticableDateandListing.

(2)ThegrantesarekeytechnologyandbusinespersonelofourGroup,neitherofwhomisaDirector,Supervisoror

conectedpersonofourCompany.Noneofthegranteshavebenindividualygrantedanagregatenumberof

underlyingSharesexceding1.0%oftheCompany’stotalsharecapital.

(3)AsoftheLatestPracticableDate,anagregateof310,000restrictedSharesgrantedtofivemployesarexpected

tolapseinacordancewiththetermsofthe2024RestrictedShareIncentiveSchemeduetoterminationof

employmentoftherelevantgrante,subjectoconsiderationandaprovaloftheBoard.

UponfulvestingoftheoutstandingrestrictedSharesgrantedunderthe2024Restricted

ShareIncentiveScheme(asumingnewAShareswilbeisuedforthevestingofalthe

outstandingrestrictedSharesandASharesintherepurchaseacountoftheCompanywilnotbe

utilized),theisuedandoutstandingshareholdingoftheShareholdersimediatelyfolowing

completionoftheListingwilbedilutedbyaproximately0.96%.Theimpactonearningsper

ShareforthethremonthsendedMarch31,2025uponfulvestingoftheoutstandingrestricted

APENDIXVISTATUTORYANDGENERALINFORMATION

–VI-35–

---

Sharesgrantedunderthe2024RestrictedShareIncentiveScheme(asumingAShareswilbe

isuedforthevestingofaltheoutstandingrestrictedSharesandASharesintherepurchase

acountoftheCompanywilnotbeutilized)isminimal,asthedilutedweightedaverage

outstandingsharesonlyincreasedfrom427,705,160to427,859,037forthethremonthsended

March31,2025,whichbroughtminimaldilutivefectascomparedtothetotalSharesinisue.

E.OTHERINFORMATION

1.EstateDuty

OurDirectorshavebenadvisedthatnomaterialiabilityforestatedutyislikelytoimpose

onourCompanyoroursubsidiaries.

2.Litigation

Saveasdisclosedinthesectionsheaded“Busines”and“FinancialInformation”inthis

prospectus,nomemberofourGroupisengagedinanylitigation,arbitrationorclaimofmaterial

importance,andnolitigation,arbitrationorclaimofmaterialimportanceisknowntourDirectors

tobependingorthreatenedbyoragainstourCompanythatwouldhaveamaterialadversefect

onourCompany’sresultsofoperationsorfinancialcondition.

3.JointSponsors

TheJointSponsorshavemadeanaplicationonourbehalftotheListingComiteforthe

listingof,andpermisiontodealin,ourHSharesinisue,ourHSharestobeisuedpursuanto

theGlobalOfering(includinganyHShareswhichmayfaltobeisuedpursuantothexercise

oftheOver-alotmentOption).Alnecesaryarangementshavebenmadetoenablethesecurities

tobeadmitedintoCAS.

EachoftheJointSponsorsatisfiestheindependencecriteriaplicabletosponsorsetoutin

Rule3A.07oftheListingRules.Pursuantothengagementleterenteredintobetwenthe

CompanyandtheJointSponsors,wehaveagredtopaytheJointSponsorsatotalfeof

US$500,000toactasthesponsorsofourCompanyinconectionwiththeproposedlistingonthe

HongKongStockExchange.

APENDIXVISTATUTORYANDGENERALINFORMATION

–VI-36–

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4.QualificationsandConsentsofExperts

ThequalificationsofthexpertswhohavegivenopinionsoradviceinthisProspectusareas

folows:

NameQualification

ChinaInternationalCapital

CorporationHongKong

SecuritiesLimited

Alicensedcorporationtoconductype1(dealingin

securities),type2(dealinginfuturescontracts),type4

(advisingonsecurities),type5(advisingonfutures

contracts)andtype6(advisingoncorporatefinance)

regulatedactivitiesasdefinedundertheSFO

CITICSecurities(HongKong)

Limited

AlicensedcorporationundertheSFOfortype4(advising

onsecurities)andtype6(advisingoncorporatefinance)

regulatedactivities(subjectoalicensingcondition)

undertheSFO

BDOLimitedCertifiedPublicAcountantsunderProfesionalAcountant

Ordinance(Chapter50oftheLawsofHongKong)and

RegisteredPublicInterestEntityAuditorunder

AcountingandFinancialReportingCouncilOrdinance

(Chapter588oftheLawsofHongKong)

GrandalLawFirm(Shanghai)PRClegaladviser

King&WodMalesonsLegaladviserastoU.S.exportcontrolandsanctionslaw

Frost&Sulivan(Beijing)Inc.,

ShanghaiBranchCo.

Independentindustryconsultant

Asia-PacificConsultingand

ApraisalLimited

Independentpropertyvaluer

Eachofthexpertsnamedabovehasgivenandhasnotwithdrawnitsconsentotheisueof

thisDocumentwiththeinclusionofitsreport,leter,and/orlegalopinion(asthecasemaybe)and

referencestoitsnameincludedintheformandcontextinwhichitrespectivelyapears.

AsoftheLatestPracticableDate,noneofthexpertsnamedabovehasanyshareholding

interestinourCompanyoranyofoursubsidiariesortheright(whetherlegalyenforceableornot)

tosubscribeforortonominatepersonstosubscribeforsecuritiesinanymemberofourGroup.

APENDIXVISTATUTORYANDGENERALINFORMATION

–VI-37–

---

5.BindingEfect

ThisProspectushalhavethefect,ifanaplicationismadepursuantothisDocument,of

renderingalpersonsconcernedboundbyaloftheprovisions(otherthanthepenalprovisions)of

sections44Aand44BoftheCompanies(WindingUpandMiscelaneousProvisions)Ordinance

insofarasaplicable.

6.BilingualDocument

TheEnglishlanguageandChineselanguageversionsofthisProspectusarebeingpublished

separately,inrelianceuponthexemptionprovidedbysection4oftheCompaniesOrdinance

(ExemptionofCompaniesandProspectusesfromCompliancewithProvisions)Notice(Chapter

32LoftheLawsofHongKong).IncaseofanydiscrepanciesbetwentheEnglishlanguage

versionandChineselanguageversionofthisProspectus,theEnglishlanguageversionshal

prevail.

7.ComplianceAdviser

OurCompanyhasapointedSomerleyCapitalLimitedasitscomplianceadviserin

compliancewithRule3A.19oftheListingRules.

8.PreliminaryExpenses

TheCompanydidnotincurmaterialpreliminaryexpensesforthepurposeoftheListing

Rules.

9.NoMaterialAdverseChange

OurDirectorsconfirmthat,uptothedateofthisProspectus,therehasbenomaterial

adversechangeinourfinancialorfinancialpositionsinceMarch31,2025.

APENDIXVISTATUTORYANDGENERALINFORMATION

–VI-38–

---

10.Promoters

ThepromotersofourCompanycomprisedalofthe41thenShareholdersofourCompanyas

atNovember17,2020beforeourconversionintoajointstocklimitedliabilitycompany.

No.Name

1ZongYanmin(宗艳民)

2GuozhaiEquityInvestmentFund(Jinan)Partnership(LimitedPartnership)

(国材股权投资基金(济南)合伙企业(有限合伙)

3LiaoningZhongdeIndustrialEquityInvestmentFundPartnership(LimitedPartnership)

(辽宁中德产业股权投资基金合伙企业(有限合伙)

4HaboTechnologyVentureCapitalCo.,Ltd.

(哈勃科技创业投资有限公司)

5ShanghaiMaimingEnterpriseManagementCenter(LimitedPartnership)

(上海麦明企业管理中心(有限合伙)

6LiaoningZhengweiNo.1High-TechEquityInvestmentFundPartnership(Limited

Partnership)

(辽宁正为一号高科技股权投资基金合伙企业(有限合伙)

7ShanghaiZhuaoEnterpriseManagementCenter(LimitedPartnership)

(上海铸傲企业管理中心(有限合伙)

8LiaoningHaitongNewEnergyLowCarbonIndustrialEquityInvestmentFundCo.Ltd.

(辽宁海通新能源低碳产业股权投资基金有限公司)

9GuangzhouZhonghaiTaichangInvestmentPartnership(LimitedPartnership)

(广州众海泰昌投资合伙企业(有限合伙)

10ZhenjiangZhiguiInvestmentCenter(LimitedPartnership)

(镇江智硅投资中心(有限合伙)

11ShanghaiJinpuGuodiaoM&AEquityInvestmentFundPartnership(LimitedPartnership)

(上海金浦国调并购股权投资基金合伙企业(有限合伙)

12GuangdongGrenHomeEquityInvestmentPartnership(LimitedPartnership)

(广东绿色家园股权投资合伙企业(有限合伙)

APENDIXVISTATUTORYANDGENERALINFORMATION

–VI-39–

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No.Name

13ShenzhenCapitalGroupCo.,Ltd.

(深圳市创新投资集团有限公司)

14ShenzhenHuiyouChuangjiaVentureCapitalPartnership(LimitedPartnership)

(深圳市惠友创嘉创业投资合伙企业(有限合伙)

15GuoXisheng(郭西省)

16GuangdongRuichenEquityInvestmentPartnership(LimitedPartnership)

(广东睿晨股权投资合伙企业(有限合伙)

17QingdaoTieyueInvestmentPartnership(LimitedPartnership)

(青岛铁岳投资合伙企业(有限合伙)

18AdvancedMicro-FabricationEquipmentInc.China

(中微半导体设备(上海)股份有限公司)

19NingboMeishanFreTradePortZoneCloudwingVentureCapitalPartnership(Limited

Partnership)

(宁波梅山保税港区云翼创业投资合伙企业(有限合伙)

20AdvancedManufacturingIndustryInvestmentFundI(LimitedPartnership)

(先进制造产业投资基金二期(有限合伙)

21AndaiHuizhiEquityInvestmentFund(Huzhou)Partnership(LimitedPartnership)

(安岱汇智股权投资基金(湖州)合伙企业(有限合伙)

22NingboMeishanFreTradePortZoneQingxinChengmingEnterpriseManagement

ConsultingPartnership(LimitedPartnership)

(宁波梅山保税港区青芯诚明企业管理咨询合伙企业(有限合伙)

23ShanghaiGuoceTechnologyManufacturingEquityInvestmentFundPartnership(Limited

Partnership)

(上海国策科技制造股权投资基金合伙企业(有限合伙)

24ShenzhenHuiyouChuangxiangVentureCapitalPartnership(LimitedPartnership)

(深圳市惠友创享创业投资合伙企业(有限合伙)

25GuangdongGrenTechnologyBankEquityInvestmentPartnership(LimitedPartnership)

(广东绿技行股权投资合伙企业(有限合伙)

APENDIXVISTATUTORYANDGENERALINFORMATION

–VI-40–

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No.Name

26WanxiangVentureCapital.,Ltd.

(万向创业投资股份有限公司)

27ZiboInovationCapitalVentureCapitalCo.Ltd.

(淄博创新资本创业投资有限公司)

28ShanghaiGunstoneEnterpriseManagementPartnership(LimitedPartnership)

(上海衮石企业管理合伙企业(有限合伙)

29HaitongInovativeSecuritiesInvestmentCo.Ltd.

(海通创新证券投资有限公司)

30QingdaoYuanchuangEnergySavingandEnvironmentalProtectionVentureCapitalFund

Partnership(LimitedPartnership)

(青岛源创节能环保创业投资基金合伙企业(有限合伙)

31NingboYunyiVentureCapitalPartnership(LimitedPartnership)

(宁波云翊创业投资合伙企业(有限合伙)

32QingdaoHuajinEquityInvestmentFundPartnership(LimitedPartnership)

(青岛华锦股权投资基金合伙企业(有限合伙)

33JinanShunxingEquityInvestmentPartnership(LimitedPartnership)

(济南舜兴股权投资合伙企业(有限合伙)

34PanOceanVisionINewTechnologyInvestment(Tianjin)Partnership(LimitedPartnership)

(泛海愿景二期新科技投资(天津)合伙企业(有限合伙)

35ShenzhenXingchuangrongInvestmentPartnership(LimitedPartnership)

(深圳市星创融投资合伙企业(有限合伙)

36HunanXiaoxiangHairunPrivateEquityFundPartnership(LimitedPartnership)

(湖南潇湘海润私募股权基金合伙企业(有限合伙)

37Shangrong(Ningbo)InvestmentCenter(LimitedPartnership)

(尚融(宁波)投资中心(有限合伙)

38NanjingJinpuXinchaoVentureCapitalPartnership(LimitedPartnership)

(南京金浦新潮创业投资合伙企业(有限合伙)

APENDIXVISTATUTORYANDGENERALINFORMATION

–VI-41–

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No.Name

39NanjingJinpuXinchaoEmergingIndustryEquityInvestmentFundPartnership(Limited

Partnership)

(南京金浦新潮新兴产业股权投资基金合伙企业(有限合伙)

40JiaxingYuxinVentureCapitalPartnership(LimitedPartnership)

(嘉兴钰鑫创业投资合伙企业(有限合伙)

41ZhuzhouJuzhiTimesPrivateEquityFundPartnership(LimitedPartnership)

(株洲聚时代私募股权基金合伙企业(有限合伙)

Saveasdisclosedinthisprospectus,withinthetwoyearsimediatelyprecedingthedateof

thisProspectus,nocash,securitiesorbenefithasbenpaid,alotedorgiven,orisproposedtobe

paid,alotedorgiventothepromotersnamedaboveinconectionwiththeGlobalOferingorthe

relatedtransactionsdescribedinthisprospectus.

11.TaxationofHoldersofHShares

HongKongstampduty,curentlychargedatheadvaloremrateof0.10%onthehigherof

theconsiderationfororthemarketvalueoftheHShares,wilbepayablebythepurchaseron

everypurchaseandbytheseleroneverysaleofanyHongKongsecurities,includingHShares

(inotherwords,atotalof0.20%iscurentlypayableonatypicalsaleandpurchasetransaction

involvingHShares).Inadition,afixedstampdutyofHK$5.00iscurentlypayableonany

instrumentoftransferofHShares.WhereoneofthepartiesisaresidentoutsideHongKongand

doesnotpaytheadvaloremdutyduebyit,thedutynotpaidwilbeasesedontheinstrumentof

transfer(ifany)andwilbepayablebythetransfere.Ifnostampdutyispaidonorbeforethe

duedate,apenaltyofupto10timesthedutypayablemaybeimposed.

APENDIXVISTATUTORYANDGENERALINFORMATION

–VI-42–

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12.Miscelaneous

SaveasdisclosedinthisProspectus:

(a)withinthetwoyearsprecedingthedateofthisProspectus:(i)wehavenotisuednor

agredtoisueanyshareorloancapitalfulyorpartlypaideitherforcashorfora

considerationotherthancash;and(i)nocomisions,discounts,brokeragefeorother

specialtermshavebengrantedinconectionwiththeisueorsaleofanysharesofour

Company;

(b)noshareorloancapitalofourCompanyisunderoptionorisagredconditionalyor

unconditionalytobeputunderoption;

(c)wehavenotisuednoragredtoisueanyfoundershares,managementsharesor

deferedshares;

(d)therearenoarangementsunderwhichfuturedividendsarewaivedoragredtobe

waived;

(e)therearenoproceduresforthexerciseofanyrightofpre-emptionortransferabilityof

subscriptionrights;

(f)therehavebenointeruptionsinourbusineswhichmayhaveorhavehada

significantefectonourfinancialpositioninthelast12months;

(g)therearenorestrictionsafectingtheremitanceofprofitsorepatriationofcapitalby

usintoHongKongfromoutsideHongKong;

(h)savefortheASharesofourCompanythatarelistedontheSTARMarket,andsavefor

theHSharestobeisuedinconectionwiththeGlobalOferingnopartofthequity

ordebtsecuritiesofourCompany,ifany,iscurentlylistedonordealtinonanystock

exchangeortradingsystem,andnosuchlistingorpermisiontolistonanystock

exchangeotherthantheStockExchangeiscurentlybeingoragredtobesought;

(i)alnecesaryarangementshavebenmadetoenabletheHsharestobeadmitedinto

CASforclearingandsetlement;and

(j)ourCompanyhasnoutstandingconvertibledebtsecuritiesordebentures.

APENDIXVISTATUTORYANDGENERALINFORMATION

–VI-43–

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DOCUMENTSDELIVEREDTOTHEREGISTRAROFCOMPANIESINHONGKONG

ThedocumentsatachedtothecopyofthisprospectusdeliveredtotheRegistrarof

CompaniesinHongKongforegistrationwere:

(a)thewritenconsentsreferedtoin“ApendixVI—StatutoryandGeneralInformation

—E.OtherInformation—4.QualificationsandConsentsofExperts”;and

(b)acopyofeachofthematerialcontractsreferedtoin“ApendixVI—Statutoryand

GeneralInformation—B.FurtherInformationaboutourBusines—1.Sumaryof

MaterialContracts”.

DOCUMENTSAVAILABLEONDISPLAY

Electronicopiesofthefolowingdocumentswilbeavailableondisplayonthewebsiteof

theStockExchangeatw.hkexnews.hkandourwebsiteatw.sic.cduringaperiodof14

daysfromthedateofthisprospectus:

1.theArticlesofAsociation;

2.theAcountant’sReportpreparedbyBDOLimited,thetextofwhichisetforthin

ApendixItothisprospectus;

3.theauditedconsolidatedfinancialstatementsofourCompanyforthethrefinancial

yearsendedDecember31,2022,2023and2024andthethremonthsendedMarch31,

2025;

4.thereportfromBDOLimitedontheunauditedproformafinancialinformationofour

Group,thetextofwhichisetforthinApendixItothisProspectus;

5.thematerialcontractsin“ApendixVI—StatutoryandGeneralInformation—B.

FurtherInformationaboutourBusines—1.SumaryofMaterialContracts”;

6.thewritenconsentsreferedtoin“ApendixVI—StatutoryandGeneralInformation

—E.OtherInformation—4.QualificationsandConsentsofExperts”;

7.theservicecontractsreferedtoin“ApendixVI—StatutoryandGeneralInformation

—C.FurtherInformationaboutourDirectors,SupervisorsandSeniorManagement—

3.ServiceContracts”;

APENDIXVIDOCUMENTSDELIVEREDTOTHEREGISTRAROF

COMPANIESANDAVAILABLEONDISPLAY

–VI-1–

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8.thelegalopinionsisuedbyGrandalLawFirm(Shanghai),ourPRCLegalAdvisor,in

respectof,amongotherthings,thegeneralcorporatematersandthepropertyinterests

ofourGroupunderPRClaw;

9.thelegalopinionisuedbyKing&WodMalesons,ourlegaladviserastoU.S.export

controlandsanctionslaw,inrespectof,amongotherthings,theU.S.exportcontroland

sanctionslaw;

10.thevaluationreportrelatingtocertainpropertyinterestofourGroupreparedby

Asia-PacificConsultingandApraisalLimited,thetextofwhichisetoutinApendix

Itothisprospectus;

11.theindustryreportisuedbyFrost&Sulivan,thesumaryofwhichisetforthinthe

sectionheaded“IndustryOverview”inthisprospectus;and

12.acopyofthefolowingPRClaws,togetherwiththeirunoficialEnglishtranslations:

(cid:129)thePRCompanylaw;

(cid:129)theSecuritiesLaw;and

(cid:129)theTrialMeasuresfortheAdministrationRelatedtotheOverseasSecurities

OferingandListingbyDomesticCompanies.

APENDIXVIDOCUMENTSDELIVEREDTOTHEREGISTRAROF

COMPANIESANDAVAILABLEONDISPLAY

–VI-2–

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C
M
Y
CM
MY
CY
CMY
K

山东天岳先进科技股份有限公司

山东天岳先进科技股份有限公司

山

东

天

岳

先

进

科

技

股

份

有

限

公

司

Joint Bokruners and Joint Lead Managers

Joint Sponsors, Sponsor-OC, Overal Cordinators, Joint Global Cordinators,

(A joint stock company incorporated in the People’s Republic of China with limited liability)

Stock Code : 2631

GLOBAL

OFERING

Overal Cordinators, Joint Global Cordinators, Joint Bokruners and Joint Lead Managers

Joint Global Cordinators, Joint Bokruners and Joint Lead Managers

Project 216 Cover V08T_32m_ENG_OP.pdf 1 7/8/2025 7:02 PM

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F R O S T & SULI\IA’l

fil Sl

For and on behalf of

Frost & Sulivan (Beijing) Inc., Shanghai Branch Co.

Title: Executive Director

.b”t;t;D i:l[J§iJ’i: M 1717 ‘J

frt1$IJl�jJ2504:f:

2504 Wholock Square

1717 Nanjing West Road

Shanghai 200040, China

Tel: 86 (21) 5407 5836

Fax: 86 (21) 3200 8500

w.frost.com

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August 11, 2025

The Board of Directors

SIC CO., LTD. (山东天岳先进科技股份有限公司) (the “Company”)

No. 99, South Tianyue Road

Huaiyin District, Jinan City

Shandong, PRC

Dear Sirs/Madams,

We, Asia-Pacific Consulting and Apraisal Limited, as the Company’s property valuer in conection

with the Company’s proposed global ofering and the proposed listing of its H shares on the Main

Board of The Stock Exchange of Hong Kong Limited (the “Stock Exchange”), refer to the

prospectus of the Company dated August 11, 2025 (the “Prospectus”).

We hereby give, and confirm that we have not withdrawn, our consent to the isue of the Prospectus

by the Company, with the inclusion therein of extracts from our property valuation report dated the

date hereof, and al references to our name, qualifications, confirmations and opinions in the form and

context in which they respectively apear in the Prospectus.

We hereby consent to you releasing this leter to the Registrar of Companies in Hong Kong and the Stock

Exchange and refering to it in the Prospectus.

We also consent to a copy of the valuation report relating to certain property interests of the

Company and its subsidiaries (the “Group”) and this leter being made available on display

as described in the section headed “Documents Delivered to the Registrar of Companies

and Available on Display” in Apendix VI to the Prospectus.

-signature page to folow-

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For and on behalf of

Asia-Pacific Consulting and Apraisal Limited

_

David G.D. Cheng

MRICS

Executive Director

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